An example of a negative real shock is a rapid increase in:
A) oil prices.
B) money supply growth.
C) government debt.
D) housing prices.

Question

Quizplus · Accepted Answer

A rapid increase in oil prices is a negative real shock as it increases the production costs for firms, leading to a decrease in supply and an increase in prices for consumers. This can lead to lower economic growth and higher inflation. The other options listed (B, C, D) are not examples of negative real shocks as they do not directly affect the economy's productive capacity or ability to produce goods and services.

An Example of a Negative Real Shock Is a Rapid