According to the Misperceptions Theory of the Short-Run Aggregate Supply

question 67

Multiple Choice

According to the misperceptions theory of the short-run aggregate supply curve,if the price level increases more than people expect,how do firms change their behaviour?

• A) They believe that the relative price has decreased,so they increase production.
• B) They believe that the relative price has decreased,so they decrease production.
• C) They believe that the relative price has increased,so they increase production.
• D) They believe that the relative price has increased,so they decrease production.

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Definitions:

Sample Observations

Individual data points collected from a subset of a larger population for the purpose of statistical analysis.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Sample Mean

The average of a set of numerical values taken from a sample of a population.

Standard Deviation

A metric that represents the extent of variability or spread within a group of numbers, demonstrating how far apart the values are from their mean.