At the Current Level of Output, Suppose the Actual Price

question 28

Multiple Choice

At the current level of output, suppose the actual price level is less than the price level that individuals expect. We know that:

• A) the AS curve will tend to shift up over time.
• B) output is currently less than the natural level of output.
• C) the interest rate will tend to rise as the economy adjusts to this situation.
• D) the nominal wage will tend to increase as individuals revise their expectations of the price level.
• E) any subsequent decrease in the aggregate price level will cause an increase in the real money supply and a rightward shift in the aggregate demand curve.

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