Supply shocks are a potential source of higher inflation,unless the government counters with ________ policy that ________ the money growth rate.

Question

Quizplus · Accepted Answer

Supply shocks can lead to higher inflation as they reduce the supply of goods and services, leading to higher prices. A government can counter this by adopting an extinguishing policy that reduces the money growth rate, thereby reducing inflationary pressures by making less money available in the economy.

Supply Shocks Are a Potential Source of Higher Inflation,unless the Government