Which of the following is correct?
A) An adverse aggregate demand shock reduces output and price in both the short run and the long run.
B) An adverse aggregate demand shock reduces output but increases price in the short run and will have no effect on output and price in the long run.
C) An adverse aggregate demand shock reduces output in the short run, but will have no effect on output in the long run.
D) An adverse aggregate demand shock reduces output and price in the short run and increases both in the long run.
Correct Answer:
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