Suppose the Actual and Expected Price Levels in an Economy

question 117

Multiple Choice

Suppose the actual and expected price levels in an economy are initially equal.However,the actual price level falls eventually due to a change in economic conditions.Which of the following will occur over the long run?

• A)The economy will move rightward along the short-run aggregate supply curve.
• B)The economy will move leftward along the short-run aggregate supply curve.
• C)The short-run aggregate supply curve will shift to the right.
• D)The short-run aggregate supply curve will shift to the left.
• E)The short-run aggregate supply curve will become flatter.

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Definitions:

Ethical implications

The moral consequences or considerations arising from actions, decisions, or policies in personal, professional, or organizational contexts.

Decision entrapment

A situation where individuals continue to invest in a decision despite new evidence suggesting it may have been the wrong choice.

Satisficing

A decision-making strategy that involves selecting an acceptable or adequate solution, rather than the optimal one.

Escalating commitment

The phenomenon where people increase their investment or continue a course of action even if it's not leading to the desired outcome, often to justify prior investments.