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Question
In the above figure, if we start at AD1 and SRAS1, and the money supply increases unexpectedly, what causes the economy to get to the long -run equilibrium?
A) Peopleʹs expectations will revise after a short-run gain in output, wages will fall, and SRAS will shift leftward.
B) Peopleʹs expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift rightward.
C) Peopleʹs expectations will revise after a short-run loss in output, wages will fall, and SRAS will shift leftward.
D) Peopleʹs expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift leftward.
Answer
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