Suppose that people expect deflation (a falling price level), but aggregate demand remains at . a. What happens to the short-run and long-run aggregate supply curves? (Draw some new curves if you need...

Suppose that people expect deflation (a falling price level), but aggregate demand remains at
.

a. What happens to the short-run and long-run aggregate supply curves? (Draw some new curves if you need to.)

b. Describe the initial effects of an expected deflation.

c. Describe what happens as it becomes obvious to everyone that the expected deflation is not going to occur.