Price shocks are always accompanied by a shift in potential GDP.

Name: Price shocks are always accompanied by a shift in potential GDP.
Brand: Quizplus
Rating: 4.8 (33 reviews)

Question

Quizplus · Accepted Answer

Price shocks can cause temporary deviations from the potential GDP in either direction, but they do not necessarily result in a shift in the potential GDP as it is determined by factors like technology, labor force, and capital stock, which are not directly affected by price shocks.

Price Shocks Are Always Accompanied by a Shift in Potential