Which of the following is the correct expression for short-run aggregate supply in the new classical view? A) Y^{P = Y + a}(P - P^e) B) Y = Y^{P + a}(P - P^e) C) Y^{P = Y + a}(P + P^e) D) Y = Y^{P + a}(P + P^e)

Question

Quizplus · Accepted Answer

In the new classical view, short-run aggregate supply (SRAS) is represented by the equation Y = Y^{P + a}(P - P^e), where Y is output, P is the price level, Y^{P is potential output, P^e is the expected price level, and a} is the slope of the SRAS curve. Option B is the correct representation of this equation.

Which of the Following Is the Correct Expression for Short-Run