At the Current Level of Output,suppose the Actual Price Level

question 11

Multiple Choice

At the current level of output,suppose the actual price level is greater than the price level that individuals expect (i.e.,Pt > Pet) .We know that

• A)output is currently below the natural level of output.
• B)the interest rate will tend to rise as the economy adjusts to this situation.
• C)the nominal wage will tend to decrease as individuals revise their expectations of the price level.
• D)the AS curve will tend to shift down over time.
• E)none of the above

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