When a permanent negative supply shock hits the economy ________
A) in the long-run, output is permanently lowered whether the central bank reacts or not
B) inflation decreases in the short-run
C) there is no long-run effect on inflation whether the central bank reacts or not
D) all of the above
E) none of the above
A
You might also like to view...
This Application examines the concept of
A) sticky prices. B) consumer spending habits. C) stagflation. D) the wealth effect.
If bargaining is costless, the assignment of property rights for an externality:
a. has no impact on the possibility of an efficient outcome and no distributional impact. b. has no impact on the possibility of an efficient outcome but does have a distributional impact. c. does have an impact on the possibility of an efficient outcome but has no distributional impact. d. does have an impact on the possibility of an efficient outcome and does have a distributional impact.