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Economics Mcqs
Q
Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?
AA. People will reduce their price expectations and the short run aggregate supply will shift right
BB. People will raise their price expectations and aggregate demand will shift left
CC. People will raise their price expectations and the short run aggregate supply will shift left
DD. People will reduce their price expectations and aggregate demand will shift right
Correct Answer:
A. A. People will reduce their price expectations and the short run aggregate supply will shift right
