An increase in the expected price level shifts a. the short-run aggregate supply curve to the left but does not affect the long-run aggregate supply curve. b. the long-run aggregate supply curve to the left but does not affect the short-run aggregate supply curve. c. neither the long-run aggregate supply curve nor the short-run aggregate supply curve to the left. d. both the short-run and long-run aggregate supply curves to the left.

Question

22-03-2022
Business

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An increase in the expected price level shifts a. the short-run aggregate supply curve to the left but does not affect the long-run aggregate supply curve. b. the long-run aggregate supply curve to the left but does not affect the short-run aggregate supply curve. c. neither the long-run aggregate supply curve nor the short-run aggregate supply curve to the left. d. both the short-run and long-run aggregate supply curves to the left.

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Parrain Parrain · Answer 1 · 2022-03-30T10:50:52+02:00

When there is an increase in the expected price level, it will shift a. the short-run aggregate supply curve to the left but does not affect the long-run aggregate supply curve.

What happens when there is an increase in expected price level?

The increase in expected price level will lead to the short run aggregate supply curve shifting to the left.

This is because suppliers will reduce supply so that they can make more profit when the prices rise in the immediate future. The long run aggregate supply curve will not be affected because supply would normalize eventually.

In conclusion, option A is correct.

Find out more on the aggregate supply curve at https://brainly.com/question/25822304.