Figure 15-2

-Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from
A) SRAS₁ to SRAS₂.
B) SRAS₂ to SRAS₁.
C) point A to point B.
D) point B to point A.

Question

Figure 15-2
 
-Refer to Figure 15-2.Ceteris paribus,an increase in the expected future price level would be represented by a movement from
A) SRAS₁ to SRAS₂. 
B) SRAS₂ to SRAS₁. 
C) point A to point B. 
D) point B to point A.

Quizplus · Accepted Answer

An increase in the expected future price level would lead to an increase in current production costs, causing a leftward shift in the short-run aggregate supply (SRAS) curve. Therefore, the movement would be from SRAS₁ to SRAS₂, as shown by the arrow in the figure. Choice B is the only option that corresponds to this direction of movement.

Figure 15-2 -Refer to Figure 15-2.Ceteris Paribus,an Increase in the Expected Future