Consider the Basic AD/AS Macro Model, Initially in a Long-

Multiple Choice

Consider the basic AD/AS macro model, initially in a long- run equilibrium. A positive AS shock will the price level and output in the short run. In the long run, the price level will and output .

A) increase; increase; return to its initial level; will be restored to potential output
B) increase; increase; decrease; will be restored to potential output
C) decrease; increase; decrease further; will be restored to potential output
D) decrease; decrease; decrease further; will decrease further
E) decrease; increase; return to its initial level; will be restored to potential output