In the AD-AS Model,money Is Not Neutral in the Short

question 4

Multiple Choice

In the AD-AS model,money is not neutral in the short run if:

• A) unexpected inflation turns into expected inflation.
• B) wages and prices are sticky.
• C) wages and prices are flexible.
• D) the change in the money supply is fully anticipated.

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Definitions:

Residual Dividend Approach

A policy whereby dividends are based on earnings minus funds retained to finance the optimal capital budget.

Predictable Dividend Payout

Regular, forecastable payments made by a company to its shareholders, usually as a part of the firm's profit sharing mechanism.

Clientele Effect

The theory that a company’s stock price will move according to the demands and preferences of its investors or clientele regarding dividend policies.

Tax-Exempt Institutional

Refers to entities or investment products that do not have to pay federal or state income taxes.