A negative short-run supply shock _____ aggregate output and _____ the aggregate price level.
A) reduces; increases
B) increases; reduces
C) reduces; reduces
D) increases; increases

Question

Quizplus · Accepted Answer

A negative short-run supply shock reduces aggregate output because it decreases the total amount of goods and services produced. It increases the aggregate price level due to the reduced supply, which leads to higher prices.

A Negative Short-Run Supply Shock _____ Aggregate Output and _____

A Negative Short-Run Supply Shock _ Aggregate Output and _