Starting from a long run equilibrium, without any policy intervention, the long run impact of a temporary adverse supply shock is that prices will return to the old level and output will be permanently lower. be permanently higher and output will be permanently lower. be permanently higher and output will be restored to its long run level. return to the old level and output will be restored to its long run level.
Starting from a long run equilibrium, without any policy intervention, the long run impact of a temporary adverse supply shock is that prices will return to the old level and output will be permanently lower. be permanently higher and output will be permanently lower. be permanently higher and output will be restored to its long run level. return to the old level and output will be restored to its long run level.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Starting from a long run equilibrium, without any policy intervention, the long run impact of a
temporary adverse supply shock is that prices will
return to the old level and output will be permanently lower.
be permanently higher and output will be permanently lower.
be permanently higher and output will be restored to its long run level.
return to the old level and output will be restored to its long run level.
Transcribed Image Text:Which of the following is an example of a demand shock
a large oil-price increase
the introduction and greater availability of credit cards
a drought that destroys agricultural crops
unions obtain a substantial wage increase
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