Which of the following is NOT a factor that helps to amplify economic shocks?
A) collateral shocks
B) labor adjustment costs
C) consumption smoothing
D) intertemporal substitution

Question

Quizplus · Accepted Answer

Consumption smoothing helps to reduce the impact of economic shocks by allowing individuals to save and spend in a way that smooths out fluctuations in income or savings. Therefore, it is not a factor that helps to amplify economic shocks. Choices A, B, and D can all amplify economic shocks in different ways, such as through the spread of shocks from one sector to another (collateral shocks), the costs of adjusting the labor market to new economic conditions (labor adjustment costs), or the substitution of consumption over time in response to changes in prices or income (intertemporal substitution).

Which of the Following Is NOT a Factor That Helps