Compared to an Initial Long-Run Equilibrium, an Aggregate Supply Shock

question 140

Multiple Choice

Compared to an initial long-run equilibrium, an aggregate supply shock that reduces potential output results in a(n) ________ gap in the short run and ________ output and ________ inflation in the long run.

• A)recessionary; lower; higher
• B)expansionary; lower; higher
• C)expansionary; higher; higher
• D)recessionary; potential; higher

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