Negative supply shocks can have a tendency to ________ costs of production and ________ the inflation rate.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question

Quizplus · Accepted Answer

Negative supply shocks, such as natural disasters or geopolitical events, reduce the availability of goods or increase the cost of inputs, leading to higher production costs and subsequently increasing the inflation rate.

Negative Supply Shocks Can Have a Tendency to ________ Costs