8) According to the misperceptions theory, after an unanticipated increase in the money supply has occurred, the SRAS curve must shift to restore general equilibrium; as it does so, the price level . A) downward; rises B) downward; falls C) upward; rises D) upward; falls

According to misperception theory of economics when a supplier observes that price of its goods is declining, there is misperception to supplier that relative price will also decrease. This leads him to supply less goods in the market.

Hence, SRAS curve rises so that for same supply there is increase in price and hence equilibrium is restored.

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8) According to the misperceptions theory, after an unanticipated increase in the money supply has occurred, the SRAS curve must shift ________ to restore general equilibrium; as it does so, the price level ________. A) downward; rises B) downward; falls C) upward; rises D) upward; falls

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8) According to the misperceptions theory, after an unanticipated increase in the money supply has occurred, the SRAS curve must shift to restore general equilibrium; as it does so, the price level . A) downward; rises B) downward; falls C) upward; rises D) upward; falls