When using the Fed model to diagnose the economy, if inflation rises even though the economy is weak or if it falls even though the economy is strong, then the economy has been hit by _____ shock.
A)an inflation
B)a financial
C)a supply
D)a spending

Question

Quizplus · Accepted Answer

If inflation rises even though the economy is weak or falls even though the economy is strong, it indicates a supply shock. This means there has been a disruption in the supply chain, causing prices to rise or fall regardless of the strength of the economy. This could be due to natural disasters, geopolitical tensions, or other factors outside of the control of the economy.

When Using the Fed Model to Diagnose the Economy, If