-In the above figure, suppose that the economy currently is at point A. If the inflation rate rises and this rise is anticipated by the public, the economy moves to a point such as point
A) B.
B) C.
C) D.
D) E.

Question

-In the above figure, suppose that the economy currently is at point A. If the inflation rate rises and this rise is anticipated by the public, the economy moves to a point such as point
A) B. 
B) C. 
C) D. 
D) E.

Quizplus · Accepted Answer

When the public anticipates inflation, firms and workers adjust their expectations and actions accordingly, leading to a shift in the short-run aggregate supply (SRAS) curve to the left. This results in a higher price level and lower output, corresponding to a move from point A to point C on the diagram, assuming a typical aggregate demand and supply model.

-In the Above Figure, Suppose That the Economy Currently Is