When the Economy Experiences a Permanent Supply Side Shock That

Multiple Choice

When the economy experiences a permanent supply side shock that shifts the long-run aggregate supply to the right, the short run aggregate supply curve will:

A) instantly shift left with the long-run aggregate supply to the new long-run equilibrium.
B) begin by shifting left initially, and then be pulled right by the long-run aggregate supply over time.
C) gradually shift right until it reaches long-run aggregate supply and the new long-run equilibrium.
D) None of these is true.