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Ryota Sumiyoshi
on Nov 11, 2024

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Given the aggregate demand curve,a beneficial supply shock will:

A) increase potential output and the price level.
B) decrease potential output and the price level.
C) increase potential output and decrease the price level.
D) decrease potential output and increase the price level.
E) cause no change in potential output or the price level.

Beneficial Supply Shock

An unexpected event that increases the production capacity and decreases the prices of goods and services.

Potential Output

The maximum sustainable level of real GDP over the long term that does not lead to an increase in inflation.

Price Level

This term refers to the average of current prices across the entire spectrum of goods and services produced in the economy.

  • Examine the consequences of advantageous and detrimental supply shocks on economic conditions.
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Jared PabloNov 14, 2024
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