Exhibit 17-2 Aggregate demand and aggregate supply curves As shown in Exhibit 17-2, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD₁ to AD₂ will cause: A)labor to adjust nominal wages sluggishly. B)the aggregate supply curve to shift from SRAS₁ to SRAS₂ C)the price level to eventually rise from 100 to 110. D)All of these.

Question

Quizplus · Accepted Answer

The Answer of Exhibit 17-2 Aggregate demand and aggregate supply curves As shown in Exhibit 17-2, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD₁ to AD₂ will cause: A)labor to adjust nominal wages sluggishly. B)the aggregate supply curve to shift from SRAS₁ to SRAS₂ C)the price level to eventually rise from 100 to 110. D)All of these.

Exhibit 17-2 Aggregate Demand and Aggregate Supply Curves as Shown