A temporary adverse productivity shock would
A)shift the labour supply curve upward.
B)reduce the level of employment.
C)decrease future income.
D)decrease the expected future marginal product of capital.

Question

Quizplus · Accepted Answer

A temporary adverse productivity shock would reduce the level of employment as it would decrease the demand for labor, leading to a decrease in output and income in the economy. It may also decrease the expected future marginal product of capital, but this is not a certain outcome. The other two options, shifting the labor supply curve upward and decreasing future income, are unlikely outcomes of a temporary adverse productivity shock.

A Temporary Adverse Productivity Shock Would