When there is a short run supply shock (perhaps because input prices increase) then economic theory...
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When there is a short run supply shock (perhaps because input prices increase) then economic theory tells us that the economic output will recover to the same level in the long run because: A) input price and wages contracts will both decline in the long rurn (both mature in the long run) it doesn't affect the economy. wage contracts are flexible and will decline in the long run (mature in the long run). input price contracts are flexible and will decline in the long run (mature in the long run). B) C) D) When there is a short run supply shock (perhaps because input prices increase) then economic theory tells us that the economic output will recover to the same level in the long run because: A) input price and wages contracts will both decline in the long rurn (both mature in the long run) it doesn't affect the economy. wage contracts are flexible and will decline in the long run (mature in the long run). input price contracts are flexible and will decline in the long run (mature in the long run). B) C) D)
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C wage contracts are flexible and will decline in the lon... View the full answer
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