Other things the same,the aggregate quantity of output supplied will increase if the price level
A)is lower than expected so that firms believe the relative price of their output has increased.
B)is lower than expected so that firms believe the relative price of their output has decreased.
C)is higher than expected so that firms believe the relative price of their output has increased.
D)is higher than expected so that firms believe the relative price of their output has decreased.

Question

Quizplus · Accepted Answer

When the price level is higher than expected, firms may perceive that the relative price of their output has increased, leading them to increase production, thus increasing the aggregate quantity of output supplied.

Other Things the Same,the Aggregate Quantity of Output Supplied Will