A negative real shock causes the long-run aggregate supply curve to shift:
A) up.
B) down.
C) left.
D) right.

Question

Quizplus · Accepted Answer

A negative real shock, such as a decrease in productivity or a natural disaster, reduces the economy's capacity to produce goods and services. This is represented by a leftward shift in the long-run aggregate supply curve, indicating a decrease in potential output at all price levels.

A Negative Real Shock Causes the Long-Run Aggregate Supply Curve