According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what they produce had   increased, so they would increase production. increased, so they would decrease production. decreased, so they would increase production. decreased, so they would decrease production.

Q: What is the short-run relationship between the unemployment rate and inflation rate as explained by…

A: The Phillips curve is a definition of the economy created by A. W. Phillips claimed that the…

Q: "As the economy moves upward along its aggregate supply curve, the economy also moves upward along…

A:

Q: Is the following statement TRUE or FALSE? Please provide reason for the answer. In the short run,…

A: Inflation is a measure of an economy's rate of rising prices for goods and services.Inflation can…

Q: Many economists attribute the troubles of the Great Recession in housing markets to a) an increase…

A: Stock market crash, which lead to an inquiry at banks, where the sub-prime mortages problems were…

Q: The CPI in Mexico has been increasing consistently recently.  A change in expectations that reflects…

A: Consumer price index (CPI) refers to the measurement of weighted average price of the consumption of…

Q: Refer to the diagram. The initial aggregate demand curve is AD1 and the initial aggregate supply…

A: Inflation measures the rate of increase in the general price level in the economy.  Inflation can be…

Q: By analyzing aggregate demand through its component parts, we can conclude that, everything else…

A: Decline in inflation rate can be used for making positive impacts in economy.

Q: If consumer confidence falls, then aggregate demand shifts   a. left, raising the inflation rate…

A: Answer to the question is as follows:

Q: Which of the following describes the cause of a  sustained inflation?

A: Various causes leads to sustainable expansion.

Q: Other things the same, when the price level rises more than expected, some firms will have Answer…

A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…

Q: Using aggregate supply and demand curves illustrate the different effects on output of demand-pull…

A: * ANSWER :-    Aggregate supply refers to the cumulative quantity of a firm's production and…

Q: Answer the attached question

A: The sustained rise in the price level of a selected basket of goods and services for a particular…

Q: What prediction can you make about the inflation when a country is in war? Write your answer with…

A: The aggregate demand curve shows the negative relationship between price level and real GDP where…

Q: The dynamic aggregate demand curve is given by: Y‚ = Ỹ − ½ (7₁ − nª ) + ε, The dynamic aggregate…

A: Inflation  Inflation is considered a situation in which the economy's prices for goods and services…

Q: Demand-pull inflation starts with a shift of the potential GDP line leftward. AS curve leftward. AS…

A: In economics, inflation is generally defined as the overall increase in the price level in the…

Q: is inflation that results from a decrease in the aggregate supply curve while the aggregate demand…

A: Inflation refers to the general increase in the all over price in an economy.

Q: Rational expectations believe that a. the government must change government spending and taxes…

A: Human Beings make rational decisions. They weigh the pros and cons of all situations and then take a…

Q: n the last year there has been a significant increase in the inflation rate in Canada. Use the…

A: The aggregate demand curve shows the negative relationship between the price level and the total…

Q: Suppose that government decides to support the firms for their investments in research and the…

A:

Q: A worldwide drought has reduced food production. Inflation has increased, unemployment has risen…

A: a.Because of increase in aggregate demand,output will increase.Because of increase in output,price…

Q: aggregate demand and aggregate supply

A: The aggregate demand (AD) curve represents the total quantity of goods and services demanded in the…

Q: Explain why the Phillips Curve is drawn to show a positive relationship between aggregate output and…

A: The aggregate demand of the economy captures a negative link between inflation and real activity,…

Q: Complete the sentences with the correct term. Some options can be used more than once, and some may…

A: Inflation is the overall increase in the general price level in an economy. It, in a way, represents…

Q: Suppose that government decides to support the firms for their investments in research and the…

A: Increase in productivity decreases production cost, so aggregate supply will rise, shifting SRAS…

Q: conservative" central banker cares   Select one:   A.   less about inflation and more about…

A: When talking about Central Bank, it can be said that it is different from other banking institutions…

Q: According to the rational-expectations approach, if everyone believes that policymakers are…

A: Meaning of Inflation: The term inflation refers to the situation under which there is an excessive…

Q: Everything else held constant, a change in workers' expectations about inflation will cause to…

A: If workers expect a change in future inflation, then it does have some implications.

Q: In Figure 2 above, what are the factors that may cause the aggregate demand to  shift from AD to…

A: Answer to the question is as follows:

Q: Supply-side inflation is caused by: OPTIONS: an increase in aggregate demand and no change in…

A: Inflation refers to the increase in the general price level. Inflation can be demand pull inflation…

Q: Using aggregate supply and aggregate demand analysis illustrate with the use of a graph the effect…

A: Initially, economy was in equilibrium at point E, where aggregate demand curve, AD, intersects the…

Q: An increase in worker productivity brought about by the introduction of new technology into the…

A: In an economy, the relationship between workers' productivity and technology is generally considered…

Q: How do new Keynesian ideas about price setting and inflation expectations affect the short-run…

A: Keynesian economics depends on two fundamental thoughts. To start with, aggregate interest is almost…

Q: Explain what we can understand by expected inflation, inflation due to an increase in aggregate…

A: Inflation in an economy is referred to be as a rise in the general price level of goods and…

Q: Complete the sentences with the correct term. Some options can be used more than once, and some may…

A: Cost‑push inflation occurs when short run aggregate supply decreases until equilibrium output falls…

Q: Use a correctly labeled aggregate demand and aggregate supply graph to illustrate cost-push…

A: The economies around the world have various entities, in the forms of households, consumers,…

Q: Suppose that government decides to support the firms for their investments in research and the…

A: Answer- Given in the question - Suppose that government decides to support the firms for their…

Q: According to the rational-expectations approach, if everyone believes that policymakers are…

A: The Philips curve gives the trade-off between inflation and unemployment. It can be written as:…

Q: On the graph above, suppose point G is on the short- run aggregate supply curve x = 2.5 + 2* (Y -…

A: Given the supply curve equation = π = 2.5 +2× (Y-22) Aggregate demand curve equation = Y=29.25 -0.5π…

Q: Compared to the Adaptive Expectations Theory, the Rational Expectations Theory asserts the same…

A: The adaptive expectations and the rational expectations would result in the difference between the…

Q: Because of global warming, Winterland got flooded frequently. Every time it gets flooded, the corn…

A: Economics as a subject studies the allocation of scarce resources among humans with unlimited wants.…

Q: The dynamic aggregate demand curve is given by: =Y -π - &₁ The dynamic aggregate supply curve is…

A: Given information AD functionYt=Y-0.5(πt-π*)+εtHereYt--- equilibrium outputY--- natural outputπt---…

Q: Please draw the Philips curve with a positive relationship between aggregate output and inflation…

A: Phillips curve is a type of curve which shows opposite relationship between inflation rate and…