According to the misperceptions theory,after an unanticipated increase in the money supply has occurred,the SRAS curve must shift ________ to restore general equilibrium; as it does so,the price level ________.
A)downward; rises
B)downward; falls
C)upward; rises
D)upward; falls

Question

Quizplus · Accepted Answer

According to the misperceptions theory, after an unanticipated increase in the money supply, the short-run aggregate supply (SRAS) curve shifts upward as workers and firms adjust their perceptions and demand higher prices for goods and services, leading to a rise in the overall price level.

According to the Misperceptions Theory,after an Unanticipated Increase in the Money