When the Economy Experiences a Permanent Supply Side Shock That

question 127

Multiple Choice

When the economy experiences a permanent supply side shock that shifts the long-run aggregate supply to the right,the short run aggregate supply curve:

• A)will instantly shift right with the long-run aggregate supply to the new long-run equilibrium.
• B)will begin by shifting left initially,and then be pulled right by the long-run aggregate supply over time.
• C)will gradually shift right until it reaches long-run aggregate supply and the new long-run equilibrium.
• D)None of these is true.