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.

---

Definitions:

Brown Bears

Large omnivorous mammals found across parts of northern Eurasia and North America, known for their thick fur and powerful build.

Markup

The amount added to the cost price of goods to cover overhead and profit; calculated as a percentage of the cost.

Net Sales

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.