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An Increase in the Actual Price Level Does Not Shift

question 20

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An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.


Definitions:

Long-Run Adjustments

Long-run adjustments are changes made by firms or industries in response to shifts in market conditions over a longer period, involving variations in production levels and the entry or exit of firms.

Market Price

The present cost at which a service or asset is available for purchase or sale in a specific market.

Downward Sloping

Describes a line on a graph that shows a decrease in one variable as another variable increases, commonly used in economics to illustrate demand curves.

Representative Firms

Firms selected as typical or average examples of a broader industry or sector, often used for analysis or benchmarking.

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