The New Keynesian Sticky-Price Theory States That in the Short

question 62

Multiple Choice

The new Keynesian sticky-price theory states that in the short run:

• A)the aggregate-supply curve is downward-sloping
• B)the aggregate-supply curve is upward-sloping
• C)the aggregate-supply curve is horizontal
• D)the aggregate-supply curve is vertical

---

Definitions:

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified period.

Writer

In the context of options, the writer is the seller who grants the right to the buyer in exchange for a premium, assuming the risk that the asset may have to be delivered under the contract terms.

Premium

The amount by which the price of something, such as a security or insurance policy, exceeds its face value or principal.

European Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price on a specified date.