When a loan is repaid to a bank, the money supply contracts by the amount of the loan

Which of the following is an example of an adverse supply shock?

A) OPEC cuts oil production B) a large oil spill in the Gulf of Mexico C) a devastating hurricane off the Louisiana coast D) all of the above E) none of the above

Which of the following statements is (are) correct? In the classical system,

a. aggregate demand is the primary determinate of the natural rate of output and employment. b. both output and employment are self-adjusting towards the natural rates of output and employment. c. changes in aggregate supply drives changes in output in the short-run and in the long-run. d. only output is self-adjusting to the supply-determined full-employment levels.