A major hurricane causes production problems in Gulf Coast region of the United States. This would cause
A) the short-run aggregate supply curve to shift to the left, but there would be no effect on the long-run aggregate supply curve.
B) the short-run aggregate supply curve to shift to the left, and the long-run aggregate supply curve would shift to the right.
C) both the short-run and the long-run aggregate supply curves to shift to the right in equal amounts.
D) both the short-run and the long-run aggregate supply curves to shift to the left, but the long-run aggregate supply curve would shift more than the short-run curve.

Question

Quizplus · Accepted Answer

A major hurricane causing production problems would lead to a decrease in the immediate capacity to produce goods and services, shifting the short-run aggregate supply (SRAS) curve to the left. However, the long-run aggregate supply (LRAS) curve, which is determined by factors like technology, population, and capital, would not be affected by temporary disruptions.

A Major Hurricane Causes Production Problems in Gulf Coast Region