If higher inflation is expected in the future, then the
A) SAS curve shifts rightward.
B) LAS curve shifts rightward.
C) AD curve shifts rightward.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

If higher inflation is expected in the future, people will start demanding higher wages and firms will increase their prices to cope with the increased costs. This will lead to a shift in the AD curve to the right, as consumer spending is stimulated and firms increase their production to meet the increased demand.

If Higher Inflation Is Expected in the Future, Then the