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.

Analyze the effects of major international conflicts, including the Yom Kippur War, on global politics and economy.

Evaluate the role of diplomacy and foreign policy strategies during the Nixon administration.

Recognize the consequences of U.S. domestic policies and actions on social movements and civil rights.

Discuss the influence of global anti-American sentiment as a result of the Vietnam War.

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Definitions:

Profit-maximizing Price

The price at which a firm can sell its product to maximize its profit, determined by market demand and production costs.

Product Differentiation

A strategy businesses use to distinguish their products from those of competitors in features, quality, or design to attract consumers.

Market Power

The ability of a firm or group of firms to manipulate the price or supply of a good or service in the market to their advantage, often by limiting production or increasing prices.

Product Differentiation

A marketing strategy that businesses use to distinguish their products from similar offerings in the market by varying features, branding, or quality.