At the Current Level of Output, Suppose the Actual Price

question 1

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

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