Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, if the central bank permanently reduces its inflation target, then in the initial period the DAS curve _____ and the DAD curve _____.
A) shifts upward; shifts rightward
B) does not shift; shifts leftward
C) does not shift; does not shift
D) shifts downward; shifts leftward

Question

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The Answer of Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, if the central bank permanently reduces its inflation target, then in the initial period the DAS curve _____ and the DAD curve _____.
A) shifts upward; shifts rightward
B) does not shift; shifts leftward
C) does not shift; does not shift
D) shifts downward; shifts leftward

Beginning at Long-Run Equilibrium in the Dynamic Model of Aggregate