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:

Expenditures

Expenditures refer to the act of spending money or incurring expenses, particularly by governments, businesses, or individuals.

Automatic Stabilizers

Strategies and initiatives aimed at stabilizing a country's economic fluctuations without further action from the government.

Economic Conditions

The state of an economy at a given time, including factors like inflation, unemployment, and GDP growth.

Federal Budget

The government budget for a fiscal year that outlines the projected spending and revenue of the federal government.