When the actual price level in an economy turns out to be lower than that expected in the short run,_____.

A) businesses cut back production
B) the potential output level decreases
C) the aggregate supply curve shifts leftward
D) the aggregate supply curve shifts rightward
E) an expansionary gap develops

Aggregate Supply Curve

A graphical representation of the total amount of goods and services that companies in an economy are willing and able to produce at different price levels.

Price Level

An index of the average prices of goods and services throughout an economy, indicating the cost of living or inflation rate.

Expansionary Gap

A situation where the actual level of output in an economy exceeds the full employment level of output, often leading to inflation.