How will a temporary adverse supply shock shift the SRAS and LRAS curves?
A)Only the SRAS curve will shift left; the LRAS curve will not change.
B)Both the SRAS and LRAS curves will shift left.
C)Only the SRAS curve will shift right; the LRAS curve will not change.
D)Both the SRAS and LRAS curves will shift right.

Question

Quizplus · Accepted Answer

A temporary adverse supply shock will cause the SRAS curve to shift left due to increased production costs or reduced availability of inputs, but it does not affect the LRAS curve, which represents the economy's potential output in the long run.

How Will a Temporary Adverse Supply Shock Shift the SRAS