Consider The Static Asad Model Suppose The Actual Price Level Is Less Than The Price Level Individuals Expect

Question

Consider the static AS-AD model. Suppose the actual price level is less than the price level individuals expect.

Which of the following is true?

(a) output is currently less than the natural level of output (b) the AS curve will tend to shift up over time

(c) the AD curve will tend to shift up over time

(d) the nominal wage will tend to increase as individuals revise their expectations

Macroeconomics