An Unexpected Increase in the Price Level Does Not Shift

question 120

True/False

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

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Definitions:

Market Rate Of Interest

The prevailing interest rate available in the marketplace for investments, loans, and savings, varying based on demand, supply, and monetary policy.

Normal Rate Of Return

The average or expected return on investment typical for a given industry or sector, accounting for risk.

Economic Profit

The net difference in a company's total earnings and all its costs, encompassing both overt and hidden expenses.

Depreciating Capital

Assets that lose value over time due to use, wear and tear, or technological obsolescence, impacting a firm's financial statements and tax liabilities.