Other things the same,if the price level rises by 2% and people were expecting it to rise by 5%,then some firms have
A)higher than desired prices,which increases their sales.
B)higher than desired prices,which depresses their sales.
C)lower than desired prices,which increases their sales.
D)lower than desired prices,which depresses their sales.

Question

Quizplus · Accepted Answer

If people were expecting a 5% increase in the price level but it only rises by 2%, firms will have higher than desired prices which will depress their sales. Consumers may choose to purchase goods and services from firms that did not raise their prices as much or look for substitutes, leading to decreased sales for these firms.

Other Things the Same,if the Price Level Rises by 2