When policymakers increase aggregate demand in response to an adverse supply shock, this is referred to as
A)accommodation.
B)full employment policy.
C)stagflation policy.
D)supply shock policy.

Question

Quizplus · Accepted Answer

Accommodation refers to increasing aggregate demand in response to an adverse supply shock, such as a sudden increase in oil prices or a natural disaster that disrupts production. This can be done through monetary or fiscal policy measures aimed at increasing consumer and business spending. The goal of accommodation is to mitigate the negative effects of the supply shock on the economy by maintaining or increasing output and employment levels.

When Policymakers Increase Aggregate Demand in Response to an Adverse