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.
Correct Answer:
Verified
Correct Answer:
Verified
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