Which of the following would be represented by a positive value of the demand shock, ε_t? A)an irrational wave of optimism among investors B)a decrease in government spending C)an aggressive increase in oil prices by a cartel D)an increase in the central bank's inflation target

Question

Quizplus · Accepted Answer

A positive value of the demand shock, ε_t, indicates an increase in demand. An irrational wave of optimism among investors would lead to increased investment and consumption, thus increasing demand.

Which of the Following Would Be Represented by a Positive