Graphically,an increase in the inflation adjustment (IA)line represents a(n)_________,and a shift leftward of the long-run aggregate supply line represents a(n)________.
A) upward inflation shock;shock to potential output
B) downward inflation shock;shock to potential output
C) excessive aggregate demand;upward inflation shock
D) shock to potential output;upward inflation shock
E) shock to potential output;downward inflation shock

Question

Quizplus · Accepted Answer

An increase in the inflation adjustment (IA) line graphically represents an upward inflation shock, while a leftward shift of the long-run aggregate supply line indicates a shock to potential output.

Graphically,an Increase in the Inflation Adjustment (IA)line Represents A(n)_________,and a Shift