Suppose the Actual and Expected Price Levels in an Economy

question 63

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 in the long run?

• 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.