In the Short Run, an Increase in the Price Level

question 149

Multiple Choice

In the short run, an increase in the price level induces firms to expand production because

• A) prices of inputs are held constant, so the higher prices for firms' products imply that it is profitable to expand production.
• B) each firm must keep its production level up to the level of its rivals, and some firms will expand production as the price level increases.
• C) higher prices allow firms to hire more inputs by offering higher prices for inputs, which increases productivity and profits.
• D) they can increase profits by increasing maintenance costs.

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Definitions:

Korsakoff's Syndrome

A chronic memory disorder caused by severe deficiency of thiamine (vitamin B1), most often associated with prolonged alcoholism.

Confabulation

The creation of altered, false, or misrepresented recollections about one's own life or the world, without the deliberate aim to mislead.

Alzheimer's Disease

A degenerative brain disorder characterized by memory loss, cognitive decline, and personality changes.

Anterograde Amnesia

The loss of the ability to create new memories after the event that caused the amnesia.