5-2 Module Five Homework i Saved 8 Suppose that a government imposes trade barriers that raise the domestic cost of production and lower potential output. What would you expect to happen to inflation and output in the short run and the long run, assuming monetary policymakers only recognize the fall in potential output with a lag and keep their inflation target unchanged? In the short run, before policymakers realize that potential output has fallen, 1.66 points O inflation will fall and output will rise. O both inflation and output will rise. O inflation will rise and output will fall. eBook O both inflation and output will fall. Print When policymakers realize potential output has fallen, in order to restore the initial inflation target, they would need to (Click to select) v. This would shift the AD curve (Click to select) v| until it intersected the new SRAS and LRAS at the original inflation target. References In the long run, the overall impact of the protectionist policies would be to O lower output and leave inflation unchanged. O lower both output and inflation. O raise output and lower inflation. O raise output and leave inflation unchanged