Answer:
Output will be lower
Explanation:
Supply shock is an economic event that occurs because of sudden changes in the supply of goods and services within an economy.
A negative supply shock will shift the SRAS to the left and it will increase the price of the good and decrease the quantity, the new equilibrium will be at lower output and higher inflation.
When the economy suffers a permanent negative supply shock, the supply may keep on increasing or decreasing rapidly.
If the central bank does not respond by changing the autonomous component of monetary policy, then the output will be lower.
This is because permanent supply shock will lead to higher prices which disrupts the production and hence the output falls.
