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Question

http://ezto.mhecloud.mcgraw-hill.com/13252698393065764801.tp4?REQUEST=SHOWmedia&media=image010.png

Refer to the graph above. If the price level is P1 the:
short-run aggregate supply curve will shift up (to the left) in the long run to restore equilibrium.
short-run aggregate supply curve will shift down (to the right) in the long run to restore equilibrium.
aggregate demand curve will shift to the left in the long run to restore equilibrium.
aggregate demand curve will shift to the right in the long run to restore equilibrium.

Explanation / Answer

short-run aggregate supply curve will shift up (to the left) in the long run to restore equilibrium.

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