When the Actual Change in the Price Level Differs from Its

question 95

Multiple Choice

When the actual change in the price level differs from its expected change,which of the following can explain why firms might change their production?

• A)both menu costs and mistaking a price level change for a change in relative prices
• B)menu costs but not mistaking a price level change for a change in relative prices
• C)mistaking a price level change for a change in relative price but not menu costs
• D)neither menu costs nor mistaking a price level change for a change in relative prices

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Definitions:

Tax-Free

Financial or income transactions that are exempt from taxation by the government.

Key Employees

Individuals who have a significant impact on a company's performance, often holding positions that are crucial for the business's operations and strategic goals.

Insignificant Contributions

Inputs or efforts that have minimal impact or importance in the context of a larger goal or project.

Self-Employed

A person who works for themselves rather than an employer and is responsible for their own business operations.