Workers expect the rate of inflation to fall from 4 per cent to 1 per cent next year.As a result,this should

Name: Workers expect the rate of inflation to fall from 4 per cent to 1 per cent next year.As a result,this should
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Question

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A decrease in expected inflation would cause a decrease in expected prices for firms, leading them to decrease production costs and increase output. This increase in output corresponds with an outward shift of the short-run aggregate supply curve, represented by choice B.

Workers Expect the Rate of Inflation to Fall from 4