As a result of an increase in expected inflation,the:
A) LRAS curve shifts to the left.
B) LRAS curve shifts to the right.
C) SRAS curve shifts up and to the left.
D) SRAS curve shifts down and to the right.

Question

Quizplus · Accepted Answer

An increase in expected inflation typically leads to higher costs for businesses, as they anticipate paying more for inputs and labor. This expectation reduces the quantity of goods and services supplied at any given price level in the short run, effectively shifting the Short-Run Aggregate Supply (SRAS) curve up and to the left. This reflects a decrease in supply due to higher anticipated costs.

As a Result of an Increase in Expected Inflation,the