Suppose the Economy Is Initially in Long-Run Equilibrium and Then

question 17

Multiple Choice

Suppose the economy is initially in long-run equilibrium and then it experiences a supply shock in the form of sharply higher energy prices.Which of the following is true?

• A)The short-run aggregate supply curve shifts leftward and the long-run supply curve shifts rightward.
• B)The short-run aggregate supply curve shifts rightward and the long-run supply curve shifts rightward.
• C)The short-run aggregate supply curve does not shift and the long-run aggregate supply curve shifts rightward.
• D)The short-run aggregate supply curve shifts rightward but the long-run aggregate supply curve does not shift.
• E)There will be a movement to the left along the aggregate demand curve.

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Definitions:

Vigor

Physical strength, good health, or energy often exhibited through robust activity.

Nomothetic

Refers to the approach in psychology that aims to study what we share with others, focusing on general laws or principles that apply to all people.

Mechanistic

A view or theory that regards complex processes as being governed by simple physical or chemical principles, often compared to the workings of a machine.

Cognitive

Related to the processes of thinking, understanding, learning, and remembering.