RBC theorists claim that adverse supply shocks can take forms other than rising raw materials prices.One such shock comes from government policy:
A)reductions in government expenditure.
B)increases in tax rates.
C)more rigorous environmental regulation.
D)reductions in the money growth rate.

Question

Quizplus · Accepted Answer

More rigorous environmental regulation can increase production costs and reduce productivity, acting as an adverse supply shock.

RBC Theorists Claim That Adverse Supply Shocks Can Take Forms