Suppose prices and wages are NOT flexible.What is most likely to occur after an adverse supply shock?
A) deflation
B) unemployment
C) inflation
D) full employment

Name: Suppose prices and wages are NOT flexible.What is most likely to occur after an adverse supply shock? A) deflation B) unemployment C) inflation D) full employment
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Question

Suppose prices and wages are NOT flexible.What is most likely to occur after an adverse supply shock?  
A) deflation 
B) unemployment 
C) inflation 
D) full employment

Quizplus · Accepted Answer

An adverse supply shock typically reduces output, leading to higher unemployment when prices and wages are not flexible.

Suppose Prices and Wages Are NOT Flexible