In the Short Run with a Model with Sticky Prices

question 5

Multiple Choice

In the short run with a model with sticky prices a positive monetary surprise:

• A)decreases labour demand.
• B)decreases real output.
• C)increases the real wage.
• D)all of the above.

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Definitions:

Total Cost

The complete cost of production, encompassing both fixed and variable costs.

Marginal Revenue

The incremental revenue acquired by a business upon selling one more unit of a good or service.

Average Variable Cost

The total variable costs divided by the quantity of output produced, indicating the average amount spent on variable costs per unit of output.

Variable Costs

Expenses that fluctuate in direct proportion to changes in production volume or activity levels, including costs like raw materials and direct labor.