Author Question: In the short run, firms expand their production when the price level rises because A) the money ... (Read 46 times)

tingc95 · **on:** Jun 29, 2018

In the short run, firms expand their production when the price level rises because

A) the money wage rate remains constant so the higher prices for their products makes it profitable for firms to expand production.
B) each firm must keep its production up to the level of its rivals, and some firms will expand production as the price level increases.
C) the higher prices allow the firm to hire more workers by offering higher wages, thereby increasing productivity and profits.
D) firms can increase their profits by increasing their maintenance.

Question 2

Liquidity is the same as

A) easy conversion of money to an asset, allowing for loss of value.
B) diversification of an investor's store of value.
C) easy conversion of an asset to a means of payment, allowing for loss of value.
D) easy conversion of an asset to a means of payment, with little or no loss of value.