Drop down choices for all a. b. c.:-financial shock-supply shock-spending shockNote:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. Consider the three types of economic shocks: financial shocks, spending shocks, and supply shocks. Determine how each oneaffects the real interest rate, the output gap, and the inflation rate.a. If the real interest rate changes, that's evidence that the economy has been hit by ab. If the output gap has shifted without much movement in the real interest rate, it suggests that there's been ac. If inflation rises in a weak economy or falls in a strong economy, while there is no change in the real interest rate, thatpoints to aas the cause.

Financial shock: A sudden disruption or instability in financial markets, leading to changes in the…

Answered: Consider the three types of economic…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Drop down choices for all a. b. c.:

-financial shock

-supply shock

-spending shock

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

Consider the three types of economic shocks: financial shocks, spending shocks, and supply shocks. Determine how each one
affects the real interest rate, the output gap, and the inflation rate.
a. If the real interest rate changes, that's evidence that the economy has been hit by a
b. If the output gap has shifted without much movement in the real interest rate, it suggests that there's been a
c. If inflation rises in a weak economy or falls in a strong economy, while there is no change in the real interest rate, that
points to a
as the cause.

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