Why Will Business Firms Lay Off Workers If the Actual

Multiple Choice

Why will business firms lay off workers if the actual inflation rate ends up being lower than was expected?

A) Firms will not trust employees who made mistakes in anticipating inflation, so they will be fired.
B) The prices of the firm's products will be higher than expected, which creates imbalance.
C) The firm's investments will become burdensome as interest rates drop.
D) Firms will have a hard time paying high wages that were negotiated on expectations of higher prices.