Figure 8-2
-In the figure above, a policy that maintains the level of real GDP in the advent of an adverse supply shock is a(n)
A) extinguishing policy; M.
B) neutral policy; L.
C) price-control policy; N.
D) accommodating policy; N.

Question

Figure 8-2 
-In the figure above, a policy that maintains the level of real GDP in the advent of an adverse supply shock is a(n)
A) extinguishing policy; M. 
B) neutral policy; L. 
C) price-control policy; N. 
D) accommodating policy; N.

Quizplus · Accepted Answer

An accommodating policy aims to maintain the level of real GDP in the advent of an adverse supply shock by adjusting the monetary policy or fiscal policy. This helps to stabilize the economy and prevent a recession. Therefore, option D is the correct choice. Option A, B, and C do not address the issue of maintaining the level of real GDP in the advent of an adverse supply shock.

Figure 8-2 -In the Figure Above, a Policy That Maintains the Level