Question: The misperceptions theory gets a different result. As shown in Figure 10.7, the shift in the aggregate demand curve from AD1 to AD2 increases both

The misperceptions theory gets a different result. As shown in Figure 10.7, the shift in the aggregate demand curve from AD1 to AD2 increases both output and the price level as the economy moves along the short-run aggregate supply curve SRAS. The difference in this result compared to the result in part (a) comes from producers misperceiving the change in the price level as a change in relative prices, and increasing their labor demand and output

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