Ask Question
19 June, 09:46

When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy, then A. inflation will be lower. B. output will be at its potential. C. output will be lower. D. inflation will not change. E. both B and C.

+5
Answers (1)
  1. 19 June, 11:41
    0
    The correct answer is (C)

    Explanation:

    A supply shock negatively effects the inventory stock of an item or product which leads to increase in the overall holding cost. A positive inventory shock leads to an increase in the overall inventory, while a negative shock decrease the output which leads to increase in the overall cost of goods and services. A negative shock can increase the overall prices of goods and services.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers