Which of the following is the correct expression for short-run aggregate supply in the new classical view? A) Y^{P = Y + a}(P - P^e) B) Y = Y^P^{+ a}(P - P^e) C) Y^{P = Y + a}(P + P^e) D) Y = Y^{P + a}(P + P^e)

Question

Quizplus · Accepted Answer

In the new classical view, the short-run aggregate supply is expressed as Y = Y^P + a(P - P^e), where Y is the output, Y^P is the potential output, P is the actual price level, P^e is the expected price level, and a is a positive constant.

Which of the Following Is the Correct Expression for Short-Run