Which of the following results in higher inflation and higher unemployment in the short run? a. a more expansionary monetary policy.

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13 April, 09:10

Which of the following results in higher inflation and higher unemployment in the short run? a. a more expansionary monetary policy.

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Nigel Castro · Answer 1

d. an adverse supply shock such as an increase in the price of oil

Explanation:

Supply shock is the occurrence of an unexpected event in the economy which impacted negatively on the cost of production and which also causes the short-run aggregate supply curve to shift inward or to the left.

The type of disturbance that shifts the short-run aggregate supply curve inward will give rise to inflation and unemployment because of fall in out and rise in the cost of production ...