Ch 6 Exercises 26 The term "shock" 0.41 points Multiple Choice eBook always refers to a decrease in real GDP and an increase in unemployment. References always refers to an unexpectedly bad event. does not tell us whether what has happened is unexpectedly bad or unexpectedly good. always refers to an increase in inflation. Saved
Added by Wendy R.
Close
Step 1
Step 1: The term "shock" in economics refers to an unexpected event or change in the economy. Show more…
Show all steps
Your feedback will help us improve your experience
Shyam P and 58 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
For each of the following, diagnose which type of economic shock has hit the economy: a. On your drive to campus, you hear a radio report describing how the recession appears to have ended and while output remains less than potential, the output gap has risen from -7% to -5%. The host is interviewing an economist who states, "The change in GDP isn't terribly surprising, as the Federal Reserve continues to cut the real interest rate." This scenario illustrates a demand shock. b. The latest inflation report indicates an unexpected uptick in inflation, even though output remains below potential. This scenario illustrates a cost-push shock. c. The real interest rate has been stable over the past few quarters, yet output has grown rapidly, leading to a more positive output gap. This scenario illustrates a supply shock.
Shyam P.
After you have studied Economics in the News on pp. $568-569,$ answer the following questions. a. How many jobs must be created each month to keep pace with a growing population? b. What normally happens to the unemployment rate when the pace of job creation exceeds the increase in population? c. Why might the unemployment rate sometimes increase, when the pace of job creation exceeds the increase in population? d. How would you expect the labor force participation rate to respond to job creation in excess of population growth? e. How would you expect an increase in the growth rate of real GDP (see last paragraph of news article) to affect jobs and unemployment?
Mauya M.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD