If the Actual Price Level Exceeds the Expected Price Level

question 11

Multiple Choice

If the actual price level exceeds the expected price level reflected in long-term contracts,

• A)firms will find production more profitable than they had expected and will increase the quantity of output supplied
• B)firms will find production less profitable than they had expected and will decrease the quantity of output supplied
• C)firms will find production more profitable than they had expected and will decrease the quantity of output supplied
• D)resource owners,because they are making a lower profit than they had expected,will decrease the quantity of output supplied
• E)unemployment will increase