An economy in long-run equilibrium experiences a temporary leftward shift in the short-run aggregate supply (SRAS) curve.
Question:
An economy in long-run equilibrium experiences a temporary leftward shift in the short-run aggregate supply (SRAS) curve. Which of the following explains the self-adjustment of the economy in the long run? The positive supply shock will reduce output and increase unemployment, but once wages increase, the output will return to the full employment level. The negative supply shock will reduce output and increase unemployment, but once wages decrease, the output will return to the full employment level. The negative supply shock will increase output and decrease unemployment, but once wages decrease, the output will return to the full employment level. The positive supply shock will reduce output and unemployment, but once wages increase, the output will return to the full employment level. The negative supply shock will increase output and unemployment, but once wages decrease, the output will return to the full employment level.
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III