An aggregate supply shocks can be either temporary or permanent. Both types can cause deviations from the trend output.

Question

Quizplus · Accepted Answer

This statement is true. Both temporary and permanent aggregate supply shocks can cause fluctuations in the output level relative to the trend. Temporary shocks are short-lived and have a temporary effect on output, while permanent shocks can have long-term effects on the economy.

An Aggregate Supply Shocks Can Be Either Temporary or Permanent