Question

I need you guys help please

Answer 1

Answer: B, C, A

Explanation:

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B - a decrease in aggregate supply would shift the SRAS line to the left, so at the new equilibrium point, there would be high price levels with a smaller real GDP, and at this point the economy is in a stagflation, a special kind of recession which is actually the worst possible situation for an economy

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C - since there is inflation, the price levels and costs of goods you buy would increase. it's stated that income is fixed, so NOMINAL income is fixed. REAL income would decrease since the purchasing power of money decreases as prices go up, but the question is asking about nominal income here

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A - this would be a shifter of the SRAS curve. since it is temporary, LRAS does not change, and the AD curve would remain in the same place while real GDP may change