In a worst-case scenario,the Federal Reserve is least successful at counteracting a negative:
A) AD shock.
B) real shock.
C) velocity shock.
D) spending shock.

Question

Quizplus · Accepted Answer

A real shock refers to a sudden and unexpected event that affects the production capacity of the economy, such as a natural disaster, a technological innovation, or a geopolitical crisis. Real shocks can have long-lasting effects on the economy and can lead to a decrease in output and an increase in inflation. Unlike AD shocks or velocity shocks, which can be counteracted by the Fed through monetary policy, real shocks are more difficult to address because they may require structural adjustments in the economy. Therefore, in a worst-case scenario, the Fed is least successful at counteracting a negative real shock.

In a Worst-Case Scenario,the Federal Reserve Is Least Successful at Counteracting