Suppose That the Actual and Expected Price Levels Are Initially

question 179

Multiple Choice

Suppose that the actual and expected price levels are initially equal,and that the expected price level falls.Which of the following will occur over the long run? (Hint: Recall the actual price level is on the vertical axis.)

• 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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