If left alone, the recession experienced by an economy will cause the short- run
A) aggregate demand curve to shift downward until the equilibrium GDP is back at full employment.
B) aggregate supply curve to shift upward until the equilibrium GDP is back at full employment.
C) aggregate supply curve to shift downward until the equilibrium GDP is back at full employment.
D) aggregate demand curve to shift upward until the equilibrium GDP is back at full employment.

Question

Quizplus · Accepted Answer

In a recession, if left alone, the economy's short-run aggregate supply curve may shift downward (to the right) as wages and resource prices fall, increasing production and moving GDP back towards full employment.

If Left Alone, the Recession Experienced by an Economy Will