Suppose the Economy Is in Long-Run Equilibrium

question 23

Multiple Choice

Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to

• A)rise.This rise in price expectations shifts the short-run aggregate supply curve to the right.
• B)rise.This rise in price expectations shifts the short-run aggregate supply curve to the left.
• C)fall.This fall in price expectations shifts the short-run aggregate supply curve to the right.
• D)fall.This fall in price expectations shifts the short-run aggregate supply curve to the left.

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Definitions:

Attraction

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Schachter and Singer

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