Instead of reacting to the negative supply shock, policymakers choose not to respond and continue with their previous set of policies. a. Given enough time, what will occur in this economy? Input prices will decrease, SRAS increases back to a long-run equilibrium O Input prices will increase, SRAS decreases back to a long-run equilibrium Input prices will decrease, SRAS decreases back to a long-run equilibrium Input prices will increase, SRAS increases back to a long-run equilibrium b. What is the main critique regarding the approach of no intervention? 4 Self-correction never occurs. O In exceptional circumstances, self-correction may happen too fast. In exceptional circumstances, self-correction may be incredibly slow or may not occur. Intervention is always needed.

Instead of reacting to the negative supply shock, policymakers choose not to respond and continue with their previous set of policies. a. Given enough time, what will occur in this economy? Input prices will decrease, SRAS increases back to a long-run equilibrium O Input prices will increase, SRAS decreases back to a long-run equilibrium Input prices will decrease, SRAS decreases back to a long-run equilibrium Input prices will increase, SRAS increases back to a long-run equilibrium b. What is the main critique regarding the approach of no intervention? 4 Self-correction never occurs. O In exceptional circumstances, self-correction may happen too fast. In exceptional circumstances, self-correction may be incredibly slow or may not occur. Intervention is always needed.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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