In 1973, 1979 and 2007, the U.S. economy was hit by ________. ...

[joe]

In 1973, 1979 and 2007, the U.S. economy was hit by ________.
 
  A) the collapse of the financial sector
  B) the assassination of a Federal Reserve Board member
  C) three major aggregate supply shocks
  D) the after-effects of the process of creative destruction

Question 2

Consider two similar economies hit by the same temporary negative supply shock. In the economy with the more credible monetary policy, there will be ________.
 
  A) smaller increases in both inflation and the real interest rate
  B) a smaller increase in inflation and larger increase in the real interest rate
  C) a smaller increase in inflation and larger decrease in output
  D) a smaller increase in output and larger increase in the real interest rate

[olderstudent]

Answer to Question 1

C

Answer to Question 2

A

[joe]

Excellent

[yeungji]

TYSM