Assume that the long-run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 1.0. Suppose that the country experiences an important crop failure due to severe tornadoes. What will be the immediate impact following the shock? Select one: a. the short-run aggregate supply curve shifts up, the price level rises, and output falls. b. the price level falls, output falls, and the short-run aggregate supply curve shifts down. c. the price level falls, output falls, but the short-run aggregate supply curve does not shift. d. the price level stays the same, the short-run aggregate supply curve does not shift, but output falls.

Assume that the long-run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 1.0. Suppose that the country experiences an important crop failure due to severe tornadoes. What will be the immediate impact following the shock? Select one: a. the short-run aggregate supply curve shifts up, the price level rises, and output falls. b. the price level falls, output falls, and the short-run aggregate supply curve shifts down. c. the price level falls, output falls, but the short-run aggregate supply curve does not shift. d. the price level stays the same, the short-run aggregate supply curve does not shift, but output falls.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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