The output losses from an upward inflation shock are ________,and the output losses from a fall in potential output are __________.
A) small;large
B) large;small
C) permanent;temporary
D) temporary;permanent
E) real;nominal

Question

Quizplus · Accepted Answer

An upward inflation shock is typically temporary and can cause only temporary output losses, while a fall in potential output is typically permanent and can cause long-lasting or even permanent output losses. Therefore, the best answer is D, which states that the output losses from an upward inflation shock are temporary and the output losses from a fall in potential output are permanent.

The Output Losses from an Upward Inflation Shock Are ________,And