CFA Practice Question

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CFA Practice Question

Changes in the expected inflation rate will affect ______.

I. aggregate demand
II. short-run aggregate supply
III. long-run aggregate supply
A. I and II
B. I and III
C. I, II, and III
Explanation: Expectations do not change LRAS, since it is determined by technology, resource base, and institutional factors.

User Contributed Comments 3

User Comment
truegazzi And what about producers? Wouldn't they sell less in present for more sales in future?
kocas yes truegazzi, and that is precisely what short run aggregate supply means.
gazman1984 What on earth are 'Institutional factors'?
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