AD - AS Shocks
-In the long run,following a combination of a negative demand shock and a temporary negative supply shock,________.
A)both inflation and output return to the original long-run equilibrium values
B)inflation is permanently increased,while output returns to potential output
C)output returns to potential output,while inflation may be higher or lower than its initial value
D)inflation is permanently reduced,while output returns to potential output
E)none of the above

Question

AD - AS Shocks 
-In the long run,following a combination of a negative demand shock and a temporary negative supply shock,________.
A)both inflation and output return to the original long-run equilibrium values 
B)inflation is permanently increased,while output returns to potential output 
C)output returns to potential output,while inflation may be higher or lower than its initial value 
D)inflation is permanently reduced,while output returns to potential output 
E)none of the above

Quizplus · Accepted Answer

The Answer of AD - AS Shocks 
-In the long run,following a combination of a negative demand shock and a temporary negative supply shock,________.
A)both inflation and output return to the original long-run equilibrium values 
B)inflation is permanently increased,while output returns to potential output 
C)output returns to potential output,while inflation may be higher or lower than its initial value 
D)inflation is permanently reduced,while output returns to potential output 
E)none of the above