Which-short run economic shock would be the MOST difficult to address through monetary policy?
A) increase in short-run aggregate supply
B) increase in aggregate demand
C) decrease in short-run aggregate supply
D) decrease in aggregate demand

Question

Quizplus · Accepted Answer

A decrease in short-run aggregate supply would be the most difficult to address through monetary policy because it is caused by factors beyond the control of the central bank, such as natural disasters or supply chain disruptions. Monetary policy is designed to influence aggregate demand, not supply, so it may not be effective in reversing a decrease in short-run aggregate supply.

Which-Short Run Economic Shock Would Be the MOST Difficult to Address