Figure 15-3
As shown in , if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause
a.
labor to adjust nominal wages sluggishly.
b.
the aggregate supply curve to shift from SRAS1 to SRAS2
c.
the price level to eventually rise from 100 to 110.
d.
All of the above.
d
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