A fall in the expected price level leads to an expectation that real wages will ____________,which will cause people to work __________,shifting the SRAS curve _______________.

Question

Quizplus · Accepted Answer

A fall in the expected price level means that workers expect their nominal wages to be higher in real terms, leading to a rise in real wages. This will cause people to work more, as they have a higher incentive to supply labor, shifting the SRAS curve rightward.

A Fall in the Expected Price Level Leads to an Expectation