According to the Sticky Price Theory, Which of the Following

question 139

Multiple Choice

According to the sticky price theory, which of the following is consistent with a more-than-expected rise in the price level?

• A)Some firms' prices are higher than desired, which increases their sales.
• B)Some firms' prices are higher than desired, which depresses their sales.
• C)Some firms' prices are lower than desired, which increases their sales.
• D)Some firms' prices are lower than desired, which depresses their sales.

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Definitions:

Mortgage Bonds

Debt securities secured by a mortgage or collection of mortgages, giving holders a claim on the underlying property.

Directors' Meeting

A formal gathering of the board of directors of an organization to discuss and make decisions on company policy and management issues.

Preferred Shares

A type of stock that provides dividends and certain privileges in the event of liquidation before common stockholders.

Common Share

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company’s profits via dividends.