MCQOPTIONS
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| 1. |
Policy makers are said to “accommodate” an adverse supply shock if they ? |
| A. | fail to respond to the adverse supply shock and allow the economy to adjust on its own. |
| B. | respond to the adverse supply shock by decreasing aggregate demand which lower prices |
| C. | respond to the adverse supply shock by decreasing short run aggregate supply |
| D. | respond to the adverse supply shock by increasing aggregate demand, which further raises prices |
| Answer» E. | |