An adverse supply shock will cause inflation to

Name: An adverse supply shock will cause inflation to
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An adverse supply shock such as an increase in oil prices or a natural disaster that disrupts production will increase the cost of production for businesses. This leads to a decrease in aggregate supply and an increase in prices, causing inflation to rise. As a result, the short-run Phillips curve, which shows the inverse relationship between inflation and unemployment, will shift to the right.

An Adverse Supply Shock Will Cause Inflation to