After an adverse supply shock occurs,the ____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)________________ in Real GDP.
A) AD; leftward; decrease; decrease
B) AD; rightward; increase; increase
C) SRAS; rightward; decrease; increase
D) SRAS; leftward; increase; decrease

Question

Quizplus · Accepted Answer

An adverse supply shock would shift the SRAS (short-run aggregate supply) curve leftward, resulting in an increase in the U.S. price level and a decrease in Real GDP. Choice A and B are incorrect because they refer to the AD (aggregate demand) curve which is not affected by supply shocks in the short-run. Choice C is also incorrect because a rightward shift in SRAS would result in a decrease in the U.S. price level and an increase in Real GDP, which is the opposite effect of an adverse supply shock.

After an Adverse Supply Shock Occurs,the ____________ Curve Shifts _____________

After an Adverse Supply Shock Occurs,the Curve Shifts _