Other things the same, when the price level rises more than expected, some firms will have Answer higher than desired prices which increases their sales. higher than desired prices which depresses their sales. lower than desired prices which increases their sales. lower than desired prices which depresses their sales.   Question 25 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 they produce had Answer increased, so they would increase production. increased, so they would decrease production. decreased, so they would increase production. decreased, so they would decrease production.

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