Let the Usual Price Expectations Relationship Hold So That It

question 15

Multiple Choice

Let the usual price expectations relationship hold so that it can be ^{represented mathematically by Pe = P^ + bP}i ^{-P^) . As the coefficient b gets}
Larger, the Lucas supply curve

• A) must get steeper.
• B) must get flatter.
• C) may get steeper or flatter depending on price variability.
• D) must shift out from the vertical axis.
• E) must shift in toward the vertical axis.

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