Which of the Following Is True for an Economy That

Multiple Choice

Which of the following is true for an economy that has experienced a temporary supply shock?

A) The supply shock is likely to have shifted the short-run aggregate supply curve to the right.
B) There is likely to be a fall in inflationary expectations in the economy.
C) Short-run macroeconomic equilibrium will consist of lower GDP and higher inflation.
D) The central bank is likely to reduce interest rates to bring the inflation rate down.