A negative aggregate supply shock results in
A) decreased GDP, increased unemployment and falling prices.
B) decreased GDP, decreased unemployment and falling prices.
C) increased GDP, increased unemployment and rising prices.
D) decreased GDP, increased unemployment and rising prices.
E) decreased GDP, decreased unemployment and rising prices.

Question

Quizplus · Accepted Answer

A negative aggregate supply shock results in a decrease in GDP due to the decrease in available goods and services, which leads to increased unemployment. However, as firms face higher costs of production, they increase prices to maintain their profit margin, resulting in rising prices.

A Negative Aggregate Supply Shock Results in