Rising inflationary expectations can shift the ______ curve to the _____.
A) AD, left
B) AD, right
C) SRAS, left
D) SRAS, right
E) none of the above

Question

Quizplus · Accepted Answer

Rising inflationary expectations increase the cost of production, which leads to a decrease in profitability for firms. As a result, firms are less willing to produce goods and services at the given price level, so the short-run aggregate supply (SRAS) curve shifts to the left. This causes prices to increase, and output to decrease in the short-run.

Rising Inflationary Expectations Can Shift the ______ Curve to the _____

Rising Inflationary Expectations Can Shift the __ Curve to the _