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:

Hue

The dimension of visual experience specified by color names and related to the wavelength of light.

Intensity

The degree of strength, force, or energy of a stimulus or behavior.

Amplitude

The height or strength of a wave signal, which in the context of sound refers to its loudness and in light, its brightness.

Sound Wave

A wave of compression and rarefaction, by which sound is propagated in an elastic medium such as air.