Which of the Following Is True for an Economy That

question 26

Multiple Choice

Which of the following is true for an economy that has experienced a temporary supply shock?

• A) The supply shock is likely to have shifted the short-run aggregate supply curve to the right.
• B) There is likely to be a fall in inflationary expectations in the economy.
• C) Short-run macroeconomic equilibrium will consist of lower GDP and higher inflation.
• D) The central bank is likely to reduce interest rates to bring the inflation rate down.

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