Which of the following would be represented by a positive value of the random demand shock, $\varepsilon$_t? A) an irrational wave of optimism among investors B) a decrease in government spending C) an aggressive increase in oil prices by a cartel D) an increase in the central bank's inflation target

Question

Quizplus · Accepted Answer

A positive value of the random demand shock represents unexpected events that increase demand. An irrational wave of optimism among investors would lead to increased spending and investment, fitting the description of a positive demand shock.

Which of the Following Would Be Represented by a Positive ε\varepsilonε

Which of the Following Would Be Represented by a Positive $\varepsilon$