Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to
a. rise. This rise in price expectations shifts the short-run aggregate supply curve to the right.
b. rise. This rise in price expectations shifts the short-run aggregate supply curve to the left.
c. fall. This fall in price expectations shifts the short-run aggregate supply curve to the right.
d. fall. This fall in price expectations shifts the short-run aggregate supply curve to the left.
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Home » Business » Suppose the economy is in long-run equilibrium. If the government increases its expenditures, eventually the increase in aggregate demand causes price expectations to a. rise.