If the Price Level Is Higher Than Expected,firms Might Raise

question 81

Multiple Choice

If the price level is higher than expected,firms might raise their production in the short run if

• A)the nominal wage they pay their employees was set based on the expected price level.
• B)prices are costly to adjust and they have set their price at some time in the past but are not ready to change it.
• C)they believe that the price of their product has risen relative to the price of other products,when in fact the rise in the price of their product reflects an increase in the general price level.
• D)All of the above are correct.

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Definitions:

Logging Companies

Businesses involved in the cutting down, processing, and selling of trees for timber or pulp.

Biodiversity Hotspot

Biogeographic region that is a significant reservoir of endemic biodiversity and is threatened with continued habitat destruction.

Endemic Species

Localized, native species that are not found anywhere else in the world. Compare with cosmopolitan species.

Human Population

The total number of humans currently living on Earth, which is subject to change due to birth, death, and migration rates.