AD - AS Shocks
-On the graph above,suppose the economy has moved from point H to point G.If the shock was temporary and inflation expectations are adaptive,the economy will next ________.
A)return to point H
B)move to point F
C)move to a point between points G and H
D)remain at point G
E)none of the above

Question

AD - AS Shocks 
-On the graph above,suppose the economy has moved from point H to point G.If the shock was temporary and inflation expectations are adaptive,the economy will next ________.
A)return to point H 
B)move to point F 
C)move to a point between points G and H 
D)remain at point G 
E)none of the above

Quizplus · Accepted Answer

If the shock was temporary and inflation expectations are adaptive, the economy will gradually adjust back towards its original position, moving to a point between G and H as expectations and conditions normalize.