Multiple Choice
-In the above figure, if we start at AD₁ and SRAS₁, and the money supply increases unexpectedly, what causes the economy to get to the long-run equilibrium?
A) People's expectations will revise after a short-run gain in output, wages will fall, and SRAS will shift leftward.
B) People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift rightward.
C) People's expectations will revise after a short-run loss in output, wages will fall, and SRAS will shift leftward.
D) People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift leftward.
Correct Answer:
Verified
Correct Answer:
Verified
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