If a Firm Expects the Rate of Inflation to Be

question 142

Multiple Choice

If a firm expects the rate of inflation to be 2 percent, it will expect its competitors to

• A)do anything, since firms operate under limited information.
• B)increase prices by 2 percent unless circumstances change.
• C)not raise prices unless there is a change in circumstances.
• D)increase prices by more than 2 percent unless circumstances change.
• E)increase prices by less than 2 percent unless circumstances change.

---

Definitions:

Piece Rate

A pay plan in which workers are paid a fixed sum for each unit of production completed.

Individual-Level

Pertaining to or focusing on actions, reactions, or impacts on a single person, as opposed to groups or organizations.

Merit Pay

A pay plan consisting of a pay rise which is linked directly to performance.

Job Design

The process of organizing tasks, duties, and responsibilities into a productive unit of work to achieve certain objectives.