Suppose That a Shock Causes the Aggregate Demand Curve to Shift

Multiple Choice

Suppose that a shock causes the aggregate demand curve to shift rightward. If the Fed does nothing

A) the economy will experience a temporary reduction in employment but will eventually return to full employment.
B) output initially will exceed potential GDP, but the economy will return to potential GDP with a higher price level.
C) the short-run aggregate supply curve will not shift leftward and there will be continued inflation.
D) eventually the short-run aggregate supply curve will shift leftward and there will be continued inflation.