According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift to the ________ to restore general equilibrium;as it does so,the price level ________.
A)right;rises
B)right;falls
C)left;rises
D)left;falls

Question

Quizplus · Accepted Answer

According to the misperceptions theory, an unanticipated increase in the money supply leads to a temporary increase in output and prices. To restore equilibrium, the SRAS curve shifts left as producers realize the price level has risen, correcting their misperceptions.

According to the Misperceptions Theory,after an Unanticipated Increase in the Money