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

Question

Quizplus · Accepted Answer

In the short run, if an economy experiences a boom, it can lead to increased production costs and wages, causing the short-run aggregate supply curve to shift upward (leftward), moving the equilibrium GDP back to full employment.

If Left Alone, the Boom Experienced by an Economy Will