If workers and firms adjust their expectations of future prices in a higher price level, the
Jshort-run aggregate supply curve shifts to the right.

Question

Quizplus · Accepted Answer

If workers and firms expect higher prices in the future, they will adjust their behavior accordingly, leading to an increase in costs and a decrease in short-run aggregate supply. Therefore, the short-run aggregate supply curve would shift to the left, not to the right.

If Workers and Firms Adjust Their Expectations of Future Prices