Use the figure below to answer the following questions. Figure 12.2.2 -Refer to Figure 12.2.2.The economy is in long- run equilibrium.If the short- run aggregate supply curve shifts leftward from SAS₀to SAS₁, ceteris paribus, then the actual inflation rate A)cannot be determined without more information. B)depends on what happens to wage settlements. C)is less than the expected inflation rate. D)is greater than the expected inflation rate. E)is the same as the expected inflation rate.

Question

Quizplus · Accepted Answer

The actual inflation rate will be less than the expected inflation rate because the leftward shift of the short-run aggregate supply curve will lead to a decrease in output and an increase in the price level.

Use the Figure Below to Answer the Following Questions