Use the figure below to answer the following questions. Figure 12.2.2 -Refer to Figure 12.2.2.The vertical distance between SAS₀and SAS₁represents the A)actual decrease in real GDP. B)expected decrease in the real wage rate. C)actual inflation rate. D)expected increase in real GDP. E)expected inflation rate.

Question

Quizplus · Accepted Answer

The vertical distance between different short-run aggregate supply curves (SAS) at the same level of real GDP in macroeconomic models typically represents changes in expected inflation. This is because shifts in the SAS curve can be caused by changes in the expectations of inflation, affecting the costs of production and thus the prices at which firms are willing to supply their goods.

Use the Figure Below to Answer the Following Questions