Two extended classical economies (in which the misperceptions theory holds) differ only in one respect: In economy A money growth and inflation have been low and stable for many years, but in economy B, money growth and inflation have fluctuated erratically between very low and very high levels. When producers in economy B observe changes in the prices of the goods they produce, from past experience they usually attribute these changes to fluctuations in the overall price level, rather than to changes in the relative prices of their goods.
Will the slope of the short-run aggregate supply curve for economy B be flatter or steeper than the slope of the curve for economy A? What about the slope of the Phillips curve?