Consider the AD/AS Model and Suppose the Economy Begins at Potential

question 95

Multiple Choice

Consider the AD/AS model and suppose the economy begins at potential output.The effect of a negative AS shock on real GDP will be reversed in the long run with a ________ shift in ________.

• A)rightward; AS
• B)rightward; AD
• C)leftward; AS
• D)leftward; AD
• E)leftward; Y*

---

Definitions:

Price Ceiling

Government-imposed maximum legal price.

Price Floor

Government-imposed minimum price (used almost exclusively to keep agricultural commodity prices up).

Productivity

Output per unit of input; efficiency with which resources are used.

Acre of Land

A unit of area used in the United States and the United Kingdom, equivalent to 43,560 square feet.