Suppose the Economy Is at Full Employment and the AS Curve

Multiple Choice

Suppose the economy is at full employment and the AS curve shifts upward due to a once-and-for-all increase in the price of oil.If the central bank does not respond to this shock,

A) prices will rise and stay at the higher level with no further inflation.
B) a recessionary gap will be created,which will eventually cause the AS curve to shift back downward.
C) aggregate demand will shift up and cause further inflation.
D) an inflationary gap will be created,which will cause the AS curve to shift upward again.
E) a recessionary gap will be created and will cause a permanent reduction in employment.