When the Economy Suffers a Temporary Negative Supply Shock and the Central

Multiple Choice

When the economy suffers a temporary negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate,then

A) aggregate output drops in the short run.
B) output will return to potential output over time.
C) aggregate output is stabilized.
D) all of the above.
E) both A and B.