ZuoTi.Pro
Question

does the increase in the expected level of inflation lead to higher price expectations leading to...

does the increase in the expected level of inflation lead to higher price expectations leading to the upward slope of the SRAS curve or cause firms to reduce output at every price level resulting in a leftward shift of SRAS

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answer : Yes.

There exists positive relationship between price and quantity supplied. This means that when price rise then quantity supplied increase and when price fall then quantity supplied decrease. Due to positive relationship between price and quantity supplied the SRAS curve is upward sloping. So, the higher price expectation lead the slope of SRAS to upward.

When at each price level the output level decrease then the SRAS curve shift to leftward.

0 0
Add a comment
Know the answer?
Add Answer to:
does the increase in the expected level of inflation lead to higher price expectations leading to...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A supply shock is A. an increase in the rate of inflation as a result of...

    A supply shock is A. an increase in the rate of inflation as a result of expansionary fiscal policy, resulting in a leftward shift of the SRAS curve. B. a sudden increase in the price of an important natural resource, resulting in a leftward shift of the SRAS curve. O C. an increase potential GDP caused by a govemment expenditure multiplier, resulting in a leftward shift of the AD curve. D. an increase in both the inflation and the unemployment...

  • What would cause the BOTH the price level to decrease and real GDP to decrease? O...

    What would cause the BOTH the price level to decrease and real GDP to decrease? O a shift to the left of the AD curve a shift to the right of the SRAS curve a shift to the left of the SRAS curve a shift to the right of the AD curve Question 6 (2 points) When there is an increase in aggregate demand along a stationary upward sloping short run in the short run. and aggregate supply curve, the...

  • ''A higher price level will increase the demand for money, but expectations of a rise in...

    ''A higher price level will increase the demand for money, but expectations of a rise in the price level will reduce the demand for money.” Is this statement true or false according to the monetary approach? Why?

  • Note: There is only one correct option. 1. To get the equilibrium level of income in...

    Note: There is only one correct option. 1. To get the equilibrium level of income in the simple Keynesian model [1] we multiply the autonomous aggregate spending by the multiplier 12 we add all the autonomous aggregate spending component and subtract the multiplier [3] we divide the multiplier by aggregate demand [4] we multiply the interest rate by the multiplier 2. An increase in the tax rate in the Keynesian model will 1 shift the aggregate spending curve upwards in...

  • Question 1 An increase in the price level will ________ the real value of wealth and,...

    Question 1 An increase in the price level will ________ the real value of wealth and, as a result, there will be ________ the aggregate demand curve. have no effect on; no change in increase; a rightward shift of reduce; an upward movement along reduce; a leftward shift of increase; an upward movement along 2. A severe drought hits a country and reduces farm output by 50 percent. This will impact aggregate demand. short-run aggregate supply and aggregate demand. short-run...

  • "A higher price level will increase the demand for money, but expectations of a rise in...

    "A higher price level will increase the demand for money, but expectations of a rise in the price level will reduce the demand for money.” Is this statement true or false according to the monetary approach? Why? with citations and references, please

  • Equations for C, I, G, and NX are given below. If the equilibrium level of output...

    Equations for C, I, G, and NX are given below. If the equilibrium level of output is $21,500, what will the new equilibrium level of output be if investment increases by 1,000? C = 1,500 + CY 1 = 1,000 G = 2,000 NX = -200 a) Not enough information is given to answer the question. Ob) $22,000 Oc) $21,500 d) $22,500 If the consumption function is defined as C = 1,250 +0.8Y, and Y = 20,000, what is the...

  • Question 16 If the price level increases in the United States relative to foreign...

    Question 16 (1 point)If the price level increases in the United States relative to foreign countries, then American consumers will purchase more foreign goods and fewer U.S. goods. This statement describes:Question 16 options:the output effect.the shift-of-spending effect.the real-balances effect.the foreign purchases effect.Question 17 (1 point)Refer to the diagram. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be:Question 17 options:E and B, respectively.F and A, respectively.G...

  • In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014

    QUESTION 4 In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014. The South African central bank is pursuing rate of 5.9 % and an unemployment rate of 24.1%. The South African central bank raised a(n): contractionary monetary policy to contain inflation. expansionary monetary policy to contain inflation. expansionary monetary policy to fight unemployment. contractionary monetary policy to fight unemployment QUESTION 5 When the economy is sluggish, the Fed will: raise interest rates, which...

  • True or False. Ceteris paribus, an increase in the domestic price level increases the price of...

    True or False. Ceteris paribus, an increase in the domestic price level increases the price of domestic goods increases their price relative to foreign goods resulting in a downward shift of aggregate expenditures and a leftward shift of the aggregate demand curve.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT