A decrease in the expected price level would shift
A)only the long-run aggregate supply curve right.
B)only the short-run aggregate supply curve right.
C)both the short-run and the long-run aggregate supply curve right.
D)Neither the short-run nor the long-run aggregate supply curve right.

Question

Quizplus · Accepted Answer

A decrease in the expected price level reduces production costs, leading to an increase in short-run aggregate supply, shifting the short-run aggregate supply curve to the right. The long-run aggregate supply curve is not affected by changes in the expected price level.

A Decrease in the Expected Price Level Would Shift