Starting from Long-Run Equilibrium, Without Policy Intervention, the Long-Run Impact

Multiple Choice

Starting from long-run equilibrium, without policy intervention, the long-run impact of an adverse supply shock is that prices will:

A) be permanently higher and output will be restored to the natural rate.
B) return to the old level and output will be restored to the natural rate.
C) be permanently higher and output will be permanently lower.
D) return to the old level, but output will be permanently lower.