\f6 12 18 24 REAL GDP (Trillions of dollars) favorable unfavorable Assuming aggregate demand is not affected by the technological improvement, the long-run effect of this supply shock is in aggregate output and in the price level.a 12 Is 24 a decrease REAL GDP [Trillions of dollars} no change an increase -gate demand is not affected by the technological improvement, the long-run effect of this V supply' shock is v in aggregate output and V in the price level. REAL GDP {Trillions [II "D change an increase a decrease Assuming aggregate demand is not affecte- - logical improvement, the long-run effect of this 7 supply shock is v in aggregate output and V in the price level. 5. Shifts of the aggregate supply curve which of the following would properly be classied as a favorable supply shock? O The interest rate decreases. spurring investment spending. Q There is an increase in government spending. 0 The government introduces a set of market reforms that strengthens property rights and makes it easier and safer for buyers and sellers to write contracts. O The world price of oil increases rapidlyr without warning and is expected to remain at the newI high level for many years, making it more expensive for all rms to produce goods and services. O A hurricane hits a major city, destroying factories, roads, airports, and homes. Because the city was a major port and transportation huh, goods and services need to he rerouted, increasing transportaon costs for rms nationwide. The following graph shows the shortrun aggregate supply curve (SEAS) and long-run aggregate supply curves (13.3.43) for an economy. Suppose there is a technological improvement that allows rms to reduce their costs of production permaneny. Illustrate the longterm effect of this change by shifting one or both of the curves on the following graph. If you don't believe there will be any long term effects, leave the curves where they are