Graphically, a positive real shock causes a shift of the: a) AD curve to the left. b) LRAS curve...
Question:
Graphically, a positive real shock causes a shift of the:
a) AD curve to the left.
b) LRAS curve to the right.
c) AD curve to the right.
d) LRAS curve to the left.
Shocks:
In economics, a shock is also known as an innovation, to a given data generating process. In the business cycle literature, the two types of shocks are positive shocks and negative shocks.
Answer and Explanation: 1
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View this answerThe answer is c).
A real shock affects real quantities, either demand or supply. A positive shock increases either demand or supply. Hence, a...
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