Suppose the Actual and Expected Price Levels Are Initially Equal

question 45

Multiple Choice

Suppose the actual and expected price levels are initially equal, and the expected price level falls.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.

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Definitions:

State-Owned Enterprise

An organization that is owned, controlled, and operated by a government entity.

Political Unrest

A state of disagreement or conflict within a country due to differing opinions on governance, policy, or leadership.

Risk Insurance

A financial product that provides a safeguard against potential losses or damages, transferring the risk from an individual or entity to an insurance provider.

Deregulating

The reduction or elimination of government power in a particular industry, usually to create more competition and increase efficiency.