Price level PA C AS2 Y2 Y₁ Yo Aggregate output AS1 ASO AD₁ Y Refer to the figure above. Assume the economy is currently at Point A on aggregate supply curve AS₁. A decrease in inflationary expectations that causes firms to decrease their prices moves the economy to Point C on aggregate supply curve AS₁. moves the economy to Point B on aggregate supply curve AS₁. shifts the aggregate supply curve to AS₂.
Price level PA C AS2 Y2 Y₁ Yo Aggregate output AS1 ASO AD₁ Y Refer to the figure above. Assume the economy is currently at Point A on aggregate supply curve AS₁. A decrease in inflationary expectations that causes firms to decrease their prices moves the economy to Point C on aggregate supply curve AS₁. moves the economy to Point B on aggregate supply curve AS₁. shifts the aggregate supply curve to AS₂.
Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply
Section: Chapter Questions
Problem 11E
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