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

question 86

Multiple Choice

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% and people were expecting it to rise by 2%,then firms 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 services 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.