A temporary adverse productivity shock would
A)shift the labor supply curve upward.
B)decrease 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 decrease the level of employment as firms adjust their production level to the lower productivity. This would lead to a temporary decrease in output and income. However, it is unlikely to impact the long-term marginal product of labor or capital, as productivity shocks are generally temporary in nature.

A Temporary Adverse Productivity Shock Would