If there is a permanent adverse supply shock,
A)the rate of inflation can be held constant if real wages are kept from falling.
B)an extinguishing policy will produce an acceleration of inflation.
C)the level of employment at the natural level of real GDP will remain constant only if the labor supply curve is vertical.
D)the natural level of real GDP will remain the same if the supply curve of labor is vertical.

Question

Quizplus · Accepted Answer

The Answer of If there is a permanent adverse supply shock,
A)the rate of inflation can be held constant if real wages are kept from falling.
B)an extinguishing policy will produce an acceleration of inflation.
C)the level of employment at the natural level of real GDP will remain constant only if the labor supply curve is vertical.
D)the natural level of real GDP will remain the same if the supply curve of labor is vertical.

If There Is a Permanent Adverse Supply Shock