Which of the Following Statements Is Correct

Multiple Choice

Which of the following statements is correct?

A) If most shocks to the economy are aggregate demand shocks or permanent aggregate supply shocks, then policy that stabilizes inflation will also stabilize economic activity, even in the short run.
B) If temporary supply shocks are more common, then a central bank must choose between stabilizing inflation and stabilizing output in the short run.
C) In the long run, there is no conflict between stabilizing inflation and economic activity in response to shocks.
D) all of the above.