According to the Misperceptions Theory of Aggregate Supply,if a Firm

question 93

Multiple Choice

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what it produce 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:

Denseness

A measure of the compactness or crowding of objects within a given area or volume.

Slope

The measure of the steepness or inclination of a line, often describing the rate of change between two variables.

Simple Linear Regression

A statistical method that allows us to summarize and study relationships between two continuous (quantitative) variables.

Standard Error

A measure of the dispersion or variability of a sampling distribution.