At the current level of output, suppose the actual price level is less than the price level that individuals expect. We know that:
A) any subsequent increase in the aggregate price level will cause a decrease in the real money supply and a leftward shift in the aggregate demand curve.
B) the AS curve will tend to shift down over time.
C) output is currently greater than the natural level of output.
D) the nominal wage will tend to increase as individuals revise their expectations of the price level.
E) the interest rate will tend to rise as the economy adjusts to this situation.

Question

Quizplus · Accepted Answer

The Answer of At the current level of output, suppose the actual price level is less than the price level that individuals expect. We know that:
A) any subsequent increase in the aggregate price level will cause a decrease in the real money supply and a leftward shift in the aggregate demand curve.
B) the AS curve will tend to shift down over time.
C) output is currently greater than the natural level of output.
D) the nominal wage will tend to increase as individuals revise their expectations of the price level.
E) the interest rate will tend to rise as the economy adjusts to this situation.

At the Current Level of Output, Suppose the Actual Price