Suppose resource suppliers and demanders find out that their price expectations were wrong.What will occur when they take corrective actions?
A) The corrective actions will cause the economy to move away from the potential output level.
B) The corrective actions will raise the unemployment level above the natural rate of unemployment.
C) The corrective actions will shift the aggregate demand curve.
D) The corrective actions will shift the short-run aggregate supply curve.

Question

Suppose resource suppliers and demanders find out that their price expectations were wrong.What will occur when they take corrective actions?  
A) The corrective actions will cause the economy to move away from the potential output level. 
B) The corrective actions will raise the unemployment level above the natural rate of unemployment. 
C) The corrective actions will shift the aggregate demand curve. 
D) The corrective actions will shift the short-run aggregate supply curve.

Quizplus · Accepted Answer

When resource suppliers and demanders take corrective actions due to incorrect price expectations, this could result in a shift of the short-run aggregate supply curve. This is because the actions taken by suppliers and demanders could affect the costs of production, which would change the level of output that can be produced at a given price level. In turn, this would impact the overall level of aggregate supply in the economy.

Suppose Resource Suppliers and Demanders Find Out That Their Price