Question: Under a negative demand shock with a fully credible monetary policy, the AD curve and the AS curve in the short run. LRAS O A.

Under a negative demand shock with a fully credible monetary policy, the AD curve and the AS curve in the short run. LRAS O A. shifts right; shifts up Inflation O B, shifts right; does not shift Rate, AS O C. shifts left; does not shift D. shifts loft; shifts up AS On the graph to the right, point |3 represent the short run effect of an aggregate demand shock if monetary policy is not credible. T AD2 AD1 YP Yg Yz Aggregate Output, Y

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