The short-run aggregate supply curve is based on the assumption that firms and workers have established nominal wages, with the expectation that Blank______.

Question

Multiple choice question.

the current price level will persist

the price level will fall

the price level is irrelevant to workers

the price level will rise

Answer 1

The correct answer is:

the current price level will persist.

In the short run, firms and workers base their wage and output decisions on the expectation that the current price level will remain stable, which influences their behavior in terms of production and employment.