A fall in import prices or an increase in productivity ________.
A)constitute a positive supply shock
B)typically leads to a rise in commodity prices
C)typically comes with a reduction in output
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

A fall in import prices or an increase in productivity are both considered positive supply shocks as they increase the supply of goods and services. This can lead to lower prices for consumers and increase output, which can have a positive impact on the economy. It is not necessarily true that it will lead to a rise in commodity prices or a reduction in output, therefore B and C are incorrect.

A Fall in Import Prices or an Increase in Productivity