If the Actual Price Level Is Lower Than the Expected

question 55

Multiple Choice

If the actual price level is lower than the expected price level reflected in long-term contracts,

• A) many firms will find production more profitable than they had expected and will increase the quantity of output supplied
• B) many firms will find production less profitable than they had expected and will decrease the quantity of output supplied
• C) many firms will find production more profitable than they had expected and will decrease the quantity of output supplied
• D) many firms will find production less profitable than they had expected and will increase the quantity of output supplied

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Definitions:

COV(X,Y)

Covariance between two variables X and Y, measuring the extent to which the variables change together and indicating the direction of their linear relationship.

Marginal Probability

The probability of occurring of a single event without consideration of any other events; it’s the likelihood of a single outcome.

Variance

Variance is a statistical measure that represents the degree of spread in a dataset's numbers; it quantifies how far each number in the set is from the mean and thus from every other number in the set.

Marginal Probability

The probability of a single event occurring without consideration of any other events, typically found in the context of probability distributions.