Shocks to the economy occur:
A) when expectations are unmet.
B) whenever the price level changes.
C) whenever government implements fiscal or monetary policy.
D) because most economic behavior is unpredictable.

Question

Quizplus · Accepted Answer

Shocks to the economy occur when expectations are unmet. This can lead to changes in consumer and producer behavior, which can have ripple effects throughout the economy. For example, if consumers expect prices to continue rising, they may begin to hoard goods or reduce their spending, which can lead to a decrease in demand and a slowdown in economic growth. Similarly, if investors expect the stock market to crash, they may begin selling their stocks, which can lead to a drop in stock prices and a loss of investment income for many people.

Shocks to the Economy Occur