Suppose the expected price level falls below the actual price level.In terms of production, how will firms react?
A) They will increase production in the short run.
B) They will decrease production in the short run.
C) They will maintain production in the short run but will increase prices.
D) They will maintain production in the short run but will decrease prices.

Question

Suppose the expected price level falls below the actual price level.In terms of production, how will firms react?  
A) They will increase production in the short run. 
B) They will decrease production in the short run. 
C) They will maintain production in the short run but will increase prices. 
D) They will maintain production in the short run but will decrease prices.

Quizplus · Accepted Answer

The Answer of Suppose the expected price level falls below the actual price level.In terms of production, how will firms react?  
A) They will increase production in the short run. 
B) They will decrease production in the short run. 
C) They will maintain production in the short run but will increase prices. 
D) They will maintain production in the short run but will decrease prices.

Suppose the Expected Price Level Falls Below the Actual Price