Next, when the firms recover from the flood and businesses can start to operate again, the short-run aggregate supply curve will:
Choose one: A. shift to the left to SRAS1. B. shift to the left to SRAS2. C. shift to the right to SRAS1. D. shift to the right to SRAS3.
After this last shift in the aggregate supply curve, the economy will be at
Choose one: A. Point A. B. Point B. C. Point C. D. Point D. E. Point E.
Finally, also suppose that people expect that there will be a huge rebuilding effort. Based on this expectation, the aggregate demand curve will
Choose one: A. shift to the left. B. shift to the right. C. remain unchanged.
Because of aggregate demand’s response to the expected rebuilding effort, the economy will be at
Choose one: A. Point A. B. Point B. C. Point C. D. Point D. E. Point E.