Which of the following would be considered a negative real supply shock?
A)an increase in expected inflation
B)a disruption of financial markets
C)a decrease in government spending
D)a decrease in guaranteed pension benefits

Question

Quizplus · Accepted Answer

A negative real supply shock refers to an event that suddenly decreases the supply of a commodity or service, leading to increased costs for production. A disruption of financial markets can lead to decreased investment in production capacity, thereby acting as a negative real supply shock. Choices A, C, and D are more related to demand-side factors or fiscal policy changes rather than direct supply-side shocks.

Which of the Following Would Be Considered a Negative Real