Home X D21 Reading: Principles of Economics x MindTap - Cengage Learning X *Homework Help - Q&A from Onl x + X A ng.cengage.com/staticb/ui/evo/index.html? deploymentld=5981412353502464190243042516&eISBN=9780357133576&id=1442010205&snapshotld=28574698 > > In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. level. Suppose firms announce the prices for 0 for the coming year. Many of the firms sell their A-Z price level turns out to be 110. F menu costs, the firms that rely on catalog sa , and firms that rely on catalogs will respond by high costs of adjusting prices, the unexpected increase in the price level causes the quantity of output supplied to the natural level of output in the short run. Suppose the economy's short-run aggregate supply (AS) curve is given by the following equation: Quantity of Output Supplied = Natural Level of Output + a x (Price Level Adual - Price Level sported) The Greek letter a represents a number that determines how expected changes in the price level. In this case, assume that o = $2 billion. That is, when the actual price he expected price level by 1, the quantity of output supplied will exceed the natural level of output by $2 billion. Suppose the natural level of output is $60 billion of spect a price level of 110. On the following graph, use the purple line (diamond onomy's long-run aggregate supply (LRAS) curve. Then use the orange line segments (square symbol) to plot the economy supply (AS) curve at each of the following price levels: 100, 105, 110, 115, and 120. (? AS LBAS PRICE LEVEL 30 40 50 80 70 80 OUTPUT ( Billions of dolars) The short-run quantity of output supplied by firms will fall below the natural level of output when the actual price level the price evel that people expected. Grade It Now Save & Continue O 9 W 3:58 PM Cloudy 3/27/2022