Question: Please explain correct option clearly. Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable

Please explain correct option clearly.

Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then there is initially gap and the short-run aggregate supply curve will LRAS LRAS' SRAS `D SRAS Inflation A B SRAS" E AD Output

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