Suppose that there is a decline in both the unemployment rate and inflation. This could be caused by:
A. A positive aggregate demand shock and a positive short-run aggregate supply shock.
B. A positive aggregate demand shock and a negative short-run aggregate supply shock.
C. A negative aggregate demand shock and a negative short-run aggregate supply shock.
D. A negative aggregate demand shock and a negative long-run aggregate supply shock.
Answer:D
Suppose that there is a decline in both the unemployment rate and inflation. This could be caused by:
A. A positive aggregate demand shock and a positive short-run aggregate supply shock. B. A positive aggregate demand shock and a negative short-run aggregate supply shock. C. A negative aggregate demand shock and a negative short-run aggregate supply shock. D. A negative aggregate demand shock and a negative long-run aggregate supply shock.