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An example of a negative supply shock is ____.
A) carbon cap-and-trade program
B) a rapid increase in energy costs
C) an fall in the price of oil
D) the shale gas revolution
Answer: B
Diff: 2 Type: MC Page Ref: 626
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates
The difference in outcomes occurring with a credible nominal anchor and without one, given
a negative aggregate supply shock is that ____.
A) the overall economic outlook is better
B) there is no difference but credibility provides national security
C) without credible policy, inflation will continue to spiral upwards
D) with credible policy, the aggregate supply curve shifts back quickly
Answer: A
Diff: 2 Type: MC Page Ref: 626
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates
The three big oil price shocks occurred in ____.
A) 1973, 1979, 2007
B) 1972, 1979, 2007
C) 1973, 1978, 2007
D) 1973, 1979, 2006
Answer: A
Diff: 2 Type: MC Page Ref: 628
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates
After the first two oil price shocks ____.
A) the Canadian inflation rate increased sharply
B) the Bank of Canada reversed its monetary policy stance
C) there was no discernible impact on aggregate output
D) the Bank of Canada implemented a nominal credible anchor policy
Answer: A
Diff: 2 Type: MC Page Ref: 628
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates