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Suppose There Is a Temporary Supply Shock Because of a War

Question 63

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Suppose there is a temporary supply shock because of a war in the Middle East,then,ceteris paribus,the ensuing cost push shock ________.


A) would lead to a temporary increase in prices but a permanent reduction in output
B) would lead to a temporary increase in output but a permanent increase in inflation
C) would lead to a temporary decrease in output but a permanent increase in inflation
D) all of the above
E) none of the above

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