Refer to the following figure when answering the following questions.
Figure 13.3: Aggregate Supply Curve
-Consider Figure 13.3. If there is a positive inflation shock, ceteris paribus, the economy would move from point ________ to point ________.
A) c; d
B) c; b
C) c; e
D) b; e
E) Not enough information is given.

Question

Refer to the following figure when answering the following questions.
Figure 13.3: Aggregate Supply Curve 
-Consider Figure 13.3. If there is a positive inflation shock, ceteris paribus, the economy would move from point ________ to point ________.
A) c; d 
B) c; b 
C) c; e 
D) b; e 
E) Not enough information is given.

Quizplus · Accepted Answer

A positive inflation shock would shift the AS curve leftward, causing a decrease in real GDP and an increase in the price level. The economy would move from point c (original equilibrium) to point e (new equilibrium with lower real GDP and higher price level).

Refer to the Following Figure When Answering the Following Questions