An inflation shock is
A) the level of inflation consistent with output in a recessionary gap.
B) the level of inflation consistent with output in an expansionary gap.
C) a sudden change in the normal behaviour of inflation,unrelated to the nation's output gap.
D) a change in the inflation rate generated by excessive aggregate demand.
E) a change in inflation brought about by changes in inflation expectations and pricing decisions.

Question

Quizplus · Accepted Answer

An inflation shock is a sudden and unexpected change in the inflation rate that is not directly related to the nation's output gap, meaning it is not caused by the usual economic factors like demand or supply changes.

An Inflation Shock Is