As an investor,negative supply shocks are not attractive because ________.
A)they tend to lead to lower productivity
B)the real rental price of capital tends to decline driving rental incomes down
C)with decreases in expected income,claims on those incomes also tend to fall leading to stock market downturns
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Negative supply shocks can have several negative effects on the economy and financial markets. They can lead to lower productivity (A), which can reduce the potential for future economic growth. They can also cause the real rental price of capital to decline (B), which can drive rental incomes down and reduce returns on investments in capital-intensive industries. Finally, decreased expected income can cause claims on those incomes to fall, which can lead to stock market downturns (C). Therefore, as an investor, one may not find negative supply shocks attractive as they can adversely affect the investment climate.

As an Investor,negative Supply Shocks Are Not Attractive Because ________