If actual prices in a country are less than the expected prices in the country, then the country's
A) aggregate demand curve will shift to the left.
B) aggregate demand curve will shift to the right.
C) short-run aggregate supply curve will shift to the left.
D) short-run aggregate supply curve will shift to the right.

Question

Quizplus · Accepted Answer

If actual prices in a country are less than the expected prices in the country, then the short-run aggregate supply curve will shift to the right. This is because firms will be willing to produce more at the lower price levels, increasing the quantity supplied at each price level, causing the short-run aggregate supply curve to shift to the right.

If Actual Prices in a Country Are Less Than the Expected