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Refer to the Diagram Below

Question 27

Multiple Choice

Refer to the diagram below.The initial aggregate demand curve is AD1 and the initial aggregate supply curve is AS1.Assuming no change in aggregate demand,the long-run response to a recession caused by cost-push inflation is best depicted as a: Refer to the diagram below.The initial aggregate demand curve is AD<sub>1</sub> and the initial aggregate supply curve is AS<sub>1</sub>.Assuming no change in aggregate demand,the long-run response to a recession caused by cost-push inflation is best depicted as a: A) move from a to d along the long-run aggregate supply curve. B) rightward shift of the aggregate supply curve from AS<sub>2</sub> to AS<sub>1</sub>. C) move from a to c to d. D) leftward shift of the aggregate supply curve from AS<sub>1</sub> to AS<sub>2</sub>.


A) move from a to d along the long-run aggregate supply curve.
B) rightward shift of the aggregate supply curve from AS2 to AS1.
C) move from a to c to d.
D) leftward shift of the aggregate supply curve from AS1 to AS2.

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