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

question 26

Multiple Choice

According to misperceptions theory,if a firm thought that inflation was going to be 5 percent and actual inflation was 4 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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