When a Permanent Negative Supply Shock Hits the Economy ________

Multiple Choice

When a permanent negative supply shock hits the economy ________.

A) a permanently lower equilibrium level of output ensues if the central bank raises interest rates
B) a permanently lower equilibrium level of output ensues if the central bank does not respond
C) a permanently higher equilibrium level of inflation ensues if the central bank does not respond
D) all of the above
E) none of the above