According to Misperceptions Theory,if a Firm Thought That Inflation Was

question 130

Multiple Choice

According to misperceptions theory,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,how may the firm be affected?

• A)It may believe that the relative price has increased, so it would increase production.
• B)It may believe that the relative price has increased, so it would decrease production.
• C)It may believe that the relative price has decreased, so it would increase production.
• D)It may believe that the relative price has decreased, so it would decrease production.

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Definitions:

Statute of Frauds

A legal principle requiring certain contracts to be in writing and signed by the party to be charged, to prevent fraud and perjuries.

Antiassignment Clause

A provision in a contract that restricts the transfer of rights or obligations to another party without prior approval.

Operation of Law

Changes in rights or duties that take place automatically under the law, without any action by the parties involved.

Monetary Payments

Transactions involving the transfer of money from one party to another as a form of compensation or settlement.