Short-Run Effects of a Negative Supply Shock
According to the graph, if a negative supply shock, such as a sudden rise in oil prices, occurs, what is the short-run effect on the aggregate supply curve?
A
The aggregate demand curve shifts left as a secondary effect.
B
The SRAS shifts to the right, lowering the price level.
C
The long-run aggregate supply curve shifts left immediately.
D
The SRAS shifts to the left, increasing the price level and reducing output.
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