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Pachacha [2.7K]
3 years ago
8

6) According to the misperceptions theory, when P < Pe, output is ________ its full-employment level and the short-run aggreg

ate supply curve must shift ________ to restore full employment. A) below; upward B) below; downward C) above; upward D) above; downward
Business
1 answer:
Sedbober [7]3 years ago
8 0

Answer: C

Above, Upward

Explanation:

This theory states that when a seller sees the price of its products decline, it makes an erroneous assumption that their relative prices have also declined. Since output is already above full employment level, the short run curve must shift upward to account for changes in the price level leading to an upward-sloping aggregate-supply curve.

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