If the actual price level is less than the expected price level reflected in long-term contracts, _____
A) firms will find production more profitable in the short run than they had expected and will decrease the quantity of output supplied.
B) firms will find production less profitable in the short run than they had expected and will decrease the quantity of output supplied.
C) firms will find production more profitable in the short run than they had expected and will increase the quantity of output supplied.
D) resource owners will earn higher returns in the short run than they had expected and will decrease the quantity of resources supplied.
E) unemployment will increase in the short run as firms will substitute labor with capital.

Question

Quizplus · Accepted Answer

The Answer of If the actual price level is less than the expected price level reflected in long-term contracts, _____
A) firms will find production more profitable in the short run than they had expected and will decrease the quantity of output supplied.
B) firms will find production less profitable in the short run than they had expected and will decrease the quantity of output supplied.
C) firms will find production more profitable in the short run than they had expected and will increase the quantity of output supplied.
D) resource owners will earn higher returns in the short run than they had expected and will decrease the quantity of resources supplied.
E) unemployment will increase in the short run as firms will substitute labor with capital.

If the Actual Price Level Is Less Than the Expected