Which of the following represents a positive supply shock, a negative supply shock, a positive demand shock, or a negative demand shock?
a. The government unexpectedly doubles all personal income tax rates.
b. A newly discovered infectious disease shuts down all international ports indefinitely.
c. Major technological progress occurs in the market for green energy.
d. An earthquake wipes out 60% of the manufacturing capacity of an economy.
e. The government unexpectedly eliminates the inheritance tax and the capital gains tax on sales of stocks and bonds.
a. negative demand shock
b. negative supply shock
c. positive supply shock
d. negative supply shock
e. positive demand shock
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Refer to Scenario 1. Which of the following happens when Sheila Jones deposits the proceeds from the sale of her bond to the Fed into her checking account at the Perez Bank?
A) Perez Bank's checkable deposits increases by $100,000 and its reserves increases by $90,000. B) Perez Bank's checkable deposits and reserves increase by $100,000 each. C) Perez Bank's checkable deposits increases by $90,000 and its reserves increases by $100,000. D) Perez Bank's checkable deposits and reserves increase by $90,000 each.
Which of the following does NOT cause a rightward shift in the supply curve?
A) a reduction in resource costs B) an increase in technology C) a reduction in the price of the good D) a reduction in the expected future price of the good