A negative real shock causes:
A) a lower inflation rate and a lower real growth rate.
B) a lower inflation rate and a higher real growth rate.
C) a higher inflation rate and a lower real growth rate.
D) a higher inflation rate and a higher real growth rate.

Question

Quizplus · Accepted Answer

A negative real shock, such as a decrease in productivity or an increase in the cost of production, typically leads to higher inflation due to increased costs for goods and services, and lower real growth as the economy becomes less efficient and productive.

A Negative Real Shock Causes