Shifting the sras and lras curves

Reference no: EM1313587

Suppose that workers and firms could always predict next year\'s price level with perfect accuracy.

Under these circumstances, is it likely that the SRAS curve would still slope upward (rather than being vertical, like LRAS)?

1. Yes, because higher price levels would still reduce household wealth and consumption spending.

2. No, in this case, the SRAS would be the same as LRAS.

3. Yes, because workers and firm price predictions do not affect SRAS.

4. No, in this case, SRASB would be downward sliping because quantity supplied would increase as the price level falls.

Reference no: EM1313587

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