If resource suppliers and demanders find out that the actual price level exceeds the expected price level, they will take corrective actions that will _____
A) cause an economy to move away from the potential output level.
B) raise the unemployment level above the natural rate of unemployment.
C) shift the aggregate demand curve for an economy.
D) shift the short-run aggregate supply curve of an economy.
E) lower the actual price level.

Question

Quizplus · Accepted Answer

If resource suppliers and demanders find out that the actual price level exceeds the expected price level, they will adjust their prices and wages accordingly, shifting the short-run aggregate supply curve of an economy to the right, ultimately leading to a lower actual price level. This is because suppliers will be willing to produce more, and demanders will be less willing to purchase at the higher price level, leading to a decrease in aggregate demand and a shift to the left of the aggregate demand curve.

If Resource Suppliers and Demanders Find Out That the Actual