Suppose That the Money Prices of Raw Materials Increase So

Multiple Choice

Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Reserve Bank does NOT respond, the higher money price of raw materials will
i. repeatedly shift the aggregate demand curve rightward and raise the price level.
ii. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices.
iii. result initially in lower employment and a higher price level.

A) iii only
B) i and iii
C) i and ii
D) ii and iii
E) i only