An adverse aggregate supply shock
A)automatically shifts the aggregate demand curve rightward.
B)causes the Phillips Curve to shift leftward and downward.
C)can be caused by a boost in the rate of growth of productivity.
D)can cause stagflation.

Question

Quizplus · Accepted Answer

An adverse aggregate supply shock, such as a sudden increase in oil prices, can reduce output and increase prices, leading to stagflation, which is characterized by high inflation and high unemployment.

An Adverse Aggregate Supply Shock