Because of a supply shock, in the short-run:
A)the aggregate supply curve shifts to the left.
B)the price level falls.
C)unemployment falls.
D)equilibrium real GDP rises.

Question

Quizplus · Accepted Answer

A supply shock causes a decrease in aggregate supply, which shifts the aggregate supply curve to the left. This results in a decrease in real GDP and an increase in the price level in the short-run. Unemployment may or may not be affected, depending on the specific nature of the supply shock.

Because of a Supply Shock, in the Short-Run