A higher expected price level would shift the short-run aggregate supply curve to the left, and a lower expected price level would shift the short-run aggregate supply curve to the right.

Question

Quizplus · Accepted Answer

This statement is true according to the theory of supply. When producers expect higher prices, they are willing to supply less at the current price level, causing a leftward shift of the supply curve. On the other hand, when they expect lower prices, they are willing to supply more at the current price level, causing a rightward shift of the supply curve.

A Higher Expected Price Level Would Shift the Short-Run Aggregate