214
MACROECONOMICS
and underestimated their real wage earnings,
w
2
/p
0
e
w
2
/p
2
.
Joining all
points such as B
'
and A
'
we get the
UPWARD
-
SLOPING
AS
CURVE
that traces out
various price-supply of output combinations for constant price expecta-
tions,
p
0
e
.
For higher price expectations,
p
1
e
p
0
e
,
it can be traced out that the
AS
curve
will be higher everywhere or
AS
(
p
1
e
)
AS
(
p
0
e
)
.
Similarly, for lower price expec-
tations,
p
2
e
p
0
e
,
the corresponding
AS
curve will be lower down as given by
AS
(
p
2
e
)
AS
(
p
0
e
)
.
There is ...
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