A real shock is shown in the AD/AS model as:
A. a shift in the AD curve only.
B. a shift in the LRAS curve only.
C. a shift in the LRAS, SRAS, and AD curves.
D. a shift in both the LRAS and SRAS curves.
Ans: D. a shift in both the LRAS and SRAS curves.
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If a firm faces a downward-sloping demand curve
A) it will always make a profit. B) the demand for its product must be inelastic. C) it can control both price and quantity sold. D) it must reduce its price to sell more units.
If reserves equal $29 million and vault cash equals $29 million, it follows that
A) bank deposits at the Federal Reserve equal $29 million. B) currency in the hands of the public equals $29 million. C) excess reserves equal $10 million. D) bank deposits at the Federal Reserve equal $0. E) There is not enough information to answer the question.