The Sticky-Price Theory of the Short-Run Aggregate Supply Curve Says

question 17

Multiple Choice

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will have

• A)higher than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied.
• B)higher than desired prices,which leads to a decrease in the aggregate quantity of goods and service supplied.
• C)lower than desired prices,which leads to an increase in the aggregate quantity of goods and services supplied.
• D)lower than desired prices,which leads to a decrease in the aggregate quantity of goods and services supplied

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Definitions:

Variable Cost

Expenses that vary directly with production output.

Mud Statues

Sculptures made from mud or clay, often created as artistic or cultural items.

Loan

A borrowed amount of funds that needs to be returned along with additional interest charges.

Total Cost

The aggregate expenditure on production, covering both unchanging and variable costs.