Suppose the Actual and Expected Price Levels in an Economy

question 147

Multiple Choice

Suppose the actual and expected price levels in an economy are initially equal. However, the actual price level becomes higher due to some change in economic conditions. Which of the following will occur eventually?

• A) The economy will move upward along the short-run aggregate supply curve.
• B) The economy will move downward 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:

External Locus

A belief system where an individual attributes their successes and failures to external factors and influences rather than their own efforts.

Control

The power to influence or direct people's behavior or the course of events, often studied as a trait that contributes to psychological well-being when effectively balanced.

Locus of Control

A psychological concept referring to an individual's belief about how much control they have over the outcomes of events in their lives, ranging from internal (a belief in personal control) to external (a belief that outside forces dominate).

Mental Health

A condition where an individual is in good health, acknowledges personal capabilities, handles life's usual stresses well, contributes positively to work, and actively supports the community.