Figure 35-9. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."
-Refer to Figure 35-9. The shift of the aggregate-supply curve from AS1 to AS2
A) results in a more favorable trade-off between inflation and unemployment.
B) results in a more favorable trade-off between inflation and the growth rate of real GDP.
C) represents an adverse shock to aggregate supply.
D) represents a favorable shock to aggregate supply.

Question

Figure 35-9. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."  
-Refer to Figure 35-9. The shift of the aggregate-supply curve from AS1 to AS2
A) results in a more favorable trade-off between inflation and unemployment. 
B) results in a more favorable trade-off between inflation and the growth rate of real GDP. 
C) represents an adverse shock to aggregate supply. 
D) represents a favorable shock to aggregate supply.

Quizplus · Accepted Answer

An adverse shock to aggregate supply shifts the aggregate supply curve to the left, resulting in higher prices and lower output.