Changes in expectations about future price levels:
A) affect only the short-run aggregate supply curve.
B) affect only the long-run aggregate supply curve.
C) affect both the long-run aggregate supply curve and the short-run aggregate supply curve.
D) do not affect either the long-run aggregate supply or the short-run aggregate supply curve.

Question

Quizplus · Accepted Answer

Changes in expectations about future price levels primarily affect the short-run aggregate supply curve because they influence production costs and wages, which are more flexible in the short run.

Changes in Expectations About Future Price Levels