The effects of a higher than expected price level are shown by a. shifting the short-run aggregate supply curve right. b...
The effects of a higher than expected price level are shown by
a. shifting the short-run aggregate supply curve right.
b. shifting the short-run aggregate supply curve left.
c. moving to the right along a given aggregate supply curve.
d. moving to the left along a given aggregate supply curve.
Homework Answers
If it is expected that in near future the price of that good may increase, so it is profitable to produce more. This is because at higher price the profitabilty will increase. Hence all firms wil supply more. Hence short-run aggregate supply curve shifts rightward.
Hence it can be said that the effects of a higher than expected price level are shown by shifting the short-run aggregate supply curve right.
Hence option a is the correct answer.
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