If the current price level in the goods and services market is higher than what was expected,output will be
A)at the economy's long-run capacity.
B)below the economy's long-run capacity.
C)above the economy's long-run capacity.
D)equal to the expected rate of inflation minus net exports.

Question

Quizplus · Accepted Answer

When the price level is higher than expected, firms may produce more than the economy's long-run capacity in the short run to take advantage of higher prices, leading to output being above the long-run capacity.

If the Current Price Level in the Goods and Services