If firms increase their prices because of a change in inflationary expectations, the AS curve will shift to the left.

Question

Quizplus · Accepted Answer

When firms increase their prices due to a change in inflationary expectations, it raises the overall price level in the economy. This causes a decrease in the quantity of goods and services supplied at each price level, shifting the aggregate supply (AS) curve to the left.

If Firms Increase Their Prices Because of a Change in Inflationary