Suppose that a shock causes the aggregate demand curve to shift rightward. If the Fed does nothing,
A.
the economy will experience a temporary reduction in employment but will eventually return to full employment.
B.
output initially will exceed potential GDP, but the economy will return to potential GDP with a higher price level.
C.
the short-run aggregate supply curve will not shift leftward and there will be continued inflation.
D.
eventually the short-run aggregate supply curve will shift leftward and there will be continued inflation.