According to the misperceptions theory,when the aggregate price level is higher than expected,the aggregate quantity of ________ the full-employment level.
A)output supplied rises above
B)output supplied falls below
C)output demanded falls below
D)output demanded rises above

Question

Quizplus · Accepted Answer

According to the misperceptions theory, when the aggregate price level is higher than expected, producers may mistakenly believe that only the price of their own product has increased, leading them to increase production. This results in the aggregate quantity of output supplied rising above the full-employment level.

According to the Misperceptions Theory,when the Aggregate Price Level Is