Use the following to answer questions :
Exhibit: Supply Shock
-(Exhibit: Supply Shock) Assume that the economy is at point B. With no further shocks or policy moves, the economy in the long run will be at point:
A) A.
B) B.
C) C.
D) D.

Question

Use the following to answer questions :
Exhibit: Supply Shock 
-(Exhibit: Supply Shock) Assume that the economy is at point B. With no further shocks or policy moves, the economy in the long run will be at point:
A) A. 
B) B. 
C) C. 
D) D.

Quizplus · Accepted Answer

In the long run, economies tend to return to their natural level of output and employment, point A, after temporary shocks. Point B represents a deviation from this level due to a supply shock.

Use the Following to Answer Questions