Adverse aggregate supply shocks would result in
A)a lower rate of inflation and a higher rate of unemployment.
B)a higher rate of inflation and a lower rate of unemployment.
C)a lower rate of inflation and a lower rate of unemployment.
D)a higher rate of inflation and a higher rate of unemployment.

Question

Quizplus · Accepted Answer

Adverse aggregate supply shocks, such as an increase in oil prices, typically lead to higher production costs, causing inflation to rise (cost-push inflation) and reducing output, which increases unemployment.

Adverse Aggregate Supply Shocks Would Result in