Q
Policy makers are said to “accommodate” an adverse supply shock if they ?
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A
A. Fail to respond to the adverse supply shock and allow the economy to adjust on its own.
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B
B. Respond to the adverse supply shock by decreasing aggregate demand which lower prices
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C
C. Respond to the adverse supply shock by decreasing short run aggregate supply
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D
D. Respond to the adverse supply shock by increasing aggregate demand, which further raises prices
Correct Answer:
D. D. Respond to the adverse supply shock by increasing aggregate demand, which further raises prices
