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According to the misperceptions theory of the short-run aggregate supply curve, if a firm thought inflation was going to be 4 percent and actual inflation was 2 percent, then the firm would believe that the relative price of what it produces had....
decreased, so it would decrease production.

Answer :

Answer: In accordance with the short-run aggregate supply curve's misperceptions theory, if a firm anticipated inflation to be 4% and it ended up being 5%,

Explanation: Why does a short-run aggregate supply curve have an upward slope, and how does the misperception effect explain it?

The inclination of producers to increase supply when they notice a rise in prices causes the short-run aggregate supply curve to have an upward slope. Worker misconception is the cause of the SRAS's increasing slope. Businesses raise the nominal wages of employees as economic prices rise.

The misperception theory is what?

The misperceptions theory postulates that when prices suddenly drop, suppliers wrongly think their relative pricing have also dropped, which prompts them to cut back on output.

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