Supply shocks always cause short-run aggregate supply to
A) remain unchanged in both the short run and the long run.
B) decrease in both the short run and the long run.
C) decrease in the short run and increase in the long run.
D) increase in both the short run and the long run.
E) return to its original position in the long run.

Question

Quizplus · Accepted Answer

Supply shocks can cause short-run aggregate supply to shift, but in the long run, the economy tends to return to its natural level of output, bringing aggregate supply back to its original position.

Supply Shocks Always Cause Short-Run Aggregate Supply to