12.3 Shocks to the System

Multiple Choice

12.3 Shocks to the System
Refer to the information provided in Figure 12.3 below to answer the questions that follow. Figure 12.3
-Refer to Figure 12.3. Assume the economy is currently at Point A on aggregate supply curve AS₁. A decrease in inflationary expectations that causes firms to decrease their prices

A) shifts the aggregate supply curve to AS₀.
B) shifts the aggregate supply curve to AS₂.
C) moves the economy to Point C on aggregate supply curve AS₁.
D) moves the economy to Point B on aggregate supply curve AS₁.