In the long run,a negative real shock will cause output growth to:
A) increase.
B) decrease.
C) remain unchanged.
D) become more difficult to predict.

Question

Quizplus · Accepted Answer

A negative real shock, such as an increase in oil prices or a decrease in consumer confidence, will likely lead to a decrease in output growth in the long run. This is because the shock will decrease consumer and business spending, leading to lower demand for goods and services, which ultimately leads to lower output.

In the Long Run,a Negative Real Shock Will Cause Output