If the money supply grows 7% during the year, and people expected the money supply to grow by 5%, what happens to the short-run aggregate supply curve, according to the misperceptions theory?
A) It shifts down.
B) It shifts up.
C) It doesn't shift.
D) It shifts down unless Ricardian equivalence holds, in which case it doesn't shift.
A
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The money demand curve has a negative slope because
A) lower interest rates cause households and firms to switch from financial assets to money. B) lower interest rates cause households and firms to switch from money to financial assets. C) lower interest rates cause households and firms to switch from money to bonds. D) lower interest rates cause households and firms to switch from money to stocks.
At the beginning of the recession of 2007-2009, real GDP in the United States was ________ potential GDP, and in June 2009, real GDP was ________ potential GDP
A) below; below B) above; below C) below; above D) above; above