If the Actual Price Level Is Less Than the Expected

question 160

Multiple Choice

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

• A) firms will find production more profitable in the short run than they had expected and will decrease the quantity of output supplied.
• B) firms will find production less profitable in the short run than they had expected and will decrease the quantity of output supplied.
• C) firms will find production more profitable in the short run than they had expected and will increase the quantity of output supplied.
• D) resource owners will earn higher returns in the short run than they had expected and will decrease the quantity of resources supplied.
• E) unemployment will increase in the short run as firms will substitute labor with capital.

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Definitions:

Freight Charges

Costs associated with transporting goods from one place to another, typically paid by the buyer or seller depending on the terms of sale.