Which of the following is true of a beneficial supply shock?
A)It can lead to a temporary lower price level.
B)It can create a recessionary gap.
C)It can permanently decrease the economy's price level.
D)It can shift the aggregate demand curve rightward.
E)It can shift the aggregate demand curve leftward.

Question

Quizplus · Accepted Answer

A beneficial supply shock can lead to an increase in the quantity supplied at every price level, causing a decrease in the equilibrium price level. However, this decrease in price level is only temporary, as the economy eventually adjusts to the new higher level of output.

Which of the Following Is True of a Beneficial Supply