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

question 9

Multiple Choice

According to the misperceptions theory of the short-run aggregate supply curve,if a firm thought that inflation was going to be 4 percent and actual inflation was 2 percent,then the firm would believe that the relative price of what it produces had

• A)increased,so it would increase production.
• B)increased,so it would decrease production.
• C)decreased,so it would increase production.
• D)decreased,so it would decrease production.

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Definitions:

Careful Decision Making

The process of making choices by considering various possible outcomes, implications, and carefully evaluating alternatives.

Controlled Processing

The mental activity that requires deliberate, conscious attention and effort, as opposed to automatic processes that require minimal awareness.

Social Loafing

The tendency of individuals to exert less effort on a task when working in a group compared to when working alone.

Contributions

Acts or offerings that aid in advancing a cause or improving a situation, often involving time, money, or effort towards a collective goal.