a. The short-run aggregate supply (SRAS) curve is very predictable. When inflation is greater than people expect, SRAS eventually shifts (choose one: up or down?) over the next year or so, and when inflation is less than people expect, SRAS eventually shifts (choose one: up or down?) over the next year or so.
b. Here’s another, equally valid way to look at the SRAS curve: When real GDP growth is above the Solow growth rate, SRAS eventually shifts (choose one: right or left?) over the next year or so, and when real GDP growth is below the Solow growth rate, SRAS eventually shifts (choose one: right or left?) over the next year or so.
c. Explain why the two ways of looking at the SRAS curve are equivalent.