Due to a worldwide oversupply, the import price of iron ore (which Italy uses for production) now falls. The Italian economy was initially at long-run equilibrium. What will happen in the short run and the long run? In the short run, the aggregate demand curve shifts left. In the long run, the price level returns to its pre-shock value, the output returns to its potential, and real wages increase. In the short run, the short-run aggregate supply curve shifts right. In the long run, the price level returns to its pre-shock value, the output returns to its potential, and real wages do not change. In the short run, the short-run aggregate supply curve shifts right. In the long run, the price level returns to its pre-shock value, the output returns to its potential, and real wages increase. In the short run, the aggregate demand curve shifts right. In the long run, the price level returns to its pre-shock value, the output returns to its potential, and real wages increase. In the short run, the aggregate demand curve shifts right. In the long run, the price level returns to its pre-shock value, the output returns to its potential, and real wages

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In the short run the correct statement among the options provided is In the short run the shortrun a... View the full answer