By itself, a supply shock, such as a hike in the price of oil, can
A) cause real GDP to permanently decrease year after year.
B) not result in persisting inflation.
C) be inflationary as long as there is no policy response.
D) result in persisting inflation if aggregate supply persistently increases.
E) result in a persisting wage-price spiral.
B
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When a consumer is maximizing total utility,
A) the average utility from each dollar spent is the same. B) total utility cannot be increased by reallocating expenditures among various products. C) the total utility obtainable from each product is at a maximum. D) the marginal utility of the last unit of each product purchased is zero.
A natural monopoly that is regulated to set its price equal to its marginal cost
A) incurs an economic loss. B) makes zero economic profit. C) makes an economic profit. D) creates the maximum deadweight loss.