Consider the Following Short Run Aggregate Supply Equation: Y = $\hat Y$

question 17

Multiple Choice

Consider the following short run aggregate supply equation: Y = $\hat Y$ + b (P - Pᵉ) ,where Y is the real output, $\hat Y$ is the full employment output,P and Pᵉ are the actual and expected price levels,respectively.Which of the following is correct?

• A)In the Keynesian model,P is always equal to Pᵉ because of sticky-wage assumption.
• B)In the Keynesian model,P may be different than Pᵉ because of sticky-wage assumption.
• C)In the Keynesian model,P is always greater than Pᵉ because of sticky-wage assumption.
• D)In the Keynesian model,P is always less than Pᵉ because of sticky-wage assumption.

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Definitions:

Significant Difference

A significant difference refers to a statistically meaningful difference between two groups, suggesting the observed effect is likely not due to chance alone.

Graduate Students

Individuals who have completed an undergraduate degree and are pursuing further education at the post-graduate level, such as a master's or doctoral degree.

Undergraduate Students

Individuals enrolled in a college or university program leading to a bachelor's degree.

Standard Error

A statistical measure of the precision for an estimated population mean.