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:

Pectoralis Major

A large muscle in the upper chest that aids in the movement of the shoulder joint, including flexion, rotation, and adduction of the arm.

Coracobrachialis

A muscle in the shoulder that assists in flexing and adducting the arm.

Tuberosity

A large rounded projection on a bone, often serving as an attachment point for muscles and ligaments.

Brachioradialis

A muscle of the forearm that flexes the forearm at the elbow, especially when the forearm is in a position midway between pronation and supination.