A decrease in the expected price level shifts short-run aggregate supply to the
A)right,and an increase in the actual price level shifts short-run aggregate supply to the right.
B)right,and an increase in the actual price level does not shift short-run aggregate supply.
C)left,and an increase in the actual price level shifts short-run aggregate supply to the left.
D)left,and an increase in the actual price level does not shift short-run aggregate supply.

Question

Quizplus · Accepted Answer

A decrease in the expected price level reduces production costs, shifting short-run aggregate supply to the right. An increase in the actual price level does not shift the short-run aggregate supply curve; it results in movement along the curve.

A Decrease in the Expected Price Level Shifts Short-Run Aggregate