2327EconomicsMedium
Policy makers are said to “accommodate” an adverse supply shock if they?
Arespond to the adverse supply shock by decreasing short run aggregate supply
Brespond to the adverse supply shock by increasing aggregate demand, which further raises prices
Crespond to the adverse supply shock by decreasing aggregate demand which lower prices
Dfail to respond to the adverse supply shock and allow the economy to adjust on its own.
Correct answer
B. respond to the adverse supply shock by increasing aggregate demand, which further raises prices
Explanation
The correct answer is respond to the adverse supply shock by increasing aggregate demand, which further raises prices.