Which of the following would be considered a negative real supply shock?
A)a relaxation of government environmental regulations
B)a permanent increase in the price of energy
C)a decrease in the money supply
D)a decrease in aggregate demand

Question

Quizplus · Accepted Answer

A negative real supply shock is a sudden decrease in the availability of goods and services or an increase in their costs, leading to a decrease in the economy's aggregate supply. A permanent increase in the price of energy leads to an increase in production costs for most goods and services, thus reducing the supply of those goods and services. The other options provided in the question are not related to a negative real supply shock.

Which of the Following Would Be Considered a Negative Real