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Economics
MEDIUM
ENGLISH
Economics
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, ?
People will reduce their price expectations and the short run aggregate supply will shift right
Correct answer
B
People will raise their price expectations and aggregate demand will shift left
Option B
C
People will raise their price expectations and the short run aggregate supply will shift left
Option C
D
People will reduce their price expectations and aggregate demand will shift right
Option D
Correct answer: A
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