If most people expect the inflation rate will increase, the:
A)Long-run aggregate supply curve would shift right
B)Aggregate demand curve would shift right
C)Short-run aggregate supply curve would shift to the right
D)Short-run aggregate supply curve would shift to the left

Question

Quizplus · Accepted Answer

If most people expect inflation to increase, then suppliers will face higher costs to produce and will likely increase prices in the short-run. This will cause a movement upward along the current short-run aggregate supply curve, resulting in a shift to the left of the short-run aggregate supply curve.

If Most People Expect the Inflation Rate Will Increase, The