Figure 9.3 Alt text for Figure 9.3: In figure 9.3, a graph comparing real GDP and price level.
Long description for Figure 9.3: The x-axis is labelled, real GDP, with 0 at the vertex, and the y-axis is labelled, price level.2 lines are shown; SRAS1 and SRAS2.Line SRAS1 begins a little above the vertex and slopes up to the top right corner.Line SRAS2 follows the same slope as line SRAS1, but is plotted to the right.Points A and B are plotted on line SRAS1.Point A is near the left end of the line and point B is near the center of the line.
-Refer to Figure 9.3.Ceteris paribus, an increase in the expected future price level would be represented by a movement from

Question

Figure 9.3

Alt text for Figure 9.3: In figure 9.3, a graph comparing real GDP and price level.
Long description for Figure 9.3: The x-axis is labelled, real GDP, with 0 at the vertex, and the y-axis is labelled, price level.2 lines are shown; SRAS1 and SRAS2.Line SRAS1 begins a little above the vertex and slopes up to the top right corner.Line SRAS2 follows the same slope as line SRAS1, but is plotted to the right.Points A and B are plotted on line SRAS1.Point A is near the left end of the line and point B is near the center of the line.
-Refer to Figure 9.3.Ceteris paribus, an increase in the expected future price level would be represented by a movement from

Quizplus · Accepted Answer

An increase in the expected future price level would shift the SRAS curve upwards (to the left) from SRAS1 to SRAS2, which would result in higher prices at any level of real GDP. Thus, the movement from point B (on SRAS1) to point A (on SRAS2) represents a decrease in the expected future price level, not an increase. Therefore, the correct choice is B, as the movement from SRA₂ to SRA₁ represents a shift upwards (to the left) of the SRAS curve and an increase in the expected future price level.

Figure 93 Alt Text for Figure 9