If aggregate demand shifts right then in the short run
A)firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the right.
B)firms will increase production.In the long run increased price expectations shift the short-run aggregate supply curve to the left.
C)firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the right.
D)firms will decrease production.In the long run increased price expectations shift the short-run aggregate supply curve to the left.

Question

Quizplus · Accepted Answer

In the short run, a rightward shift in aggregate demand leads firms to increase production to meet higher demand. In the long run, increased price expectations due to higher demand and prices cause the short-run aggregate supply curve to shift to the left as costs rise.

If Aggregate Demand Shifts Right Then in the Short Run