Figure 36-8.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,"Inf Rate" means "Inflation Rate." -Refer to Figure 36-8.The shift of the aggregate-supply curve from AS₁ to AS₂ A)results in a more favorable trade-off between inflation and unemployment. B)results in a more favorable trade-off between inflation and the growth rate of real GDP. C)represents an adverse shock to aggregate supply. D)represents a favorable shock to aggregate supply.

Question

Quizplus · Accepted Answer

An adverse shock to aggregate supply shifts the aggregate-supply curve to the left, resulting in a higher price level and a lower level of real GDP.