Question

The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will increase if the price level

a. increases by more than expected so that firms believe the relative price of their output has decreased.
b. increases by less than expected so that firms believe the relative price of their output has decreased.
c. increases by less than expected so that firms believe the relative price of their output has increased.
d. increases by more than expected so that firms believe the relative price of their output has increased.

Answer 1

Option C is correct

Step-by-step explanation:

This means an increase in actual price would make quantity aggregate supply curve to shift to the right.