If Actual Output Exceeds Potential Output for a Prolonged Period

question 90

Multiple Choice

If actual output exceeds potential output for a prolonged period of time, we would eventually expect factor prices to:

• A)rise, causing the SAS curve to shift up (to the left).
• B)fall, causing the SAS curve to shift down (to the right).
• C)rise, causing the LAS curve to shift out to the right.
• D)fall, causing the LAS curve to shift in to the left.