Multiple Choice
Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then there is initially ________ gap and the short-run aggregate supply curve will ________. 
A) an expansionary; eventually shift to SRAS'
B) an expansionary; eventually shift to SRAS"
C) a recessionary; eventually shift to SRAS"
D) a recessionary; eventually shift to SRAS'
Correct Answer:
Verified
Correct Answer:
Verified
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