Which of the following would NOT be associated with an adverse supply shock?
A)The short-run Phillips curve shifts left.
B)Unemployment rises.
C)The price level rises.
D)Output falls.

Question

Quizplus · Accepted Answer

An adverse supply shock leads to a decrease in aggregate supply, which causes output to fall and the price level to rise. The short-run Phillips curve shows the relationship between unemployment and inflation, and a leftward shift of the curve indicates lower unemployment and higher inflation. This would not be associated with an adverse supply shock, as unemployment generally rises during such a shock.

Which of the Following Would NOT Be Associated with an Adverse