With Sticky Prices, in the Stylized DSGE Model, a Monetary

question 71

Multiple Choice

With sticky prices, in the stylized DSGE model, a monetary contraction ________, which ________.

• A) raises inflationary expectations; pushes the Phillips curve up
• B) lowers inflationary expectations; expands labor supply
• C) decreases aggregate demand; decreases labor demand
• D) raises taxes; reduces labor demand
• E) represents a fiscal expansion; pushes up labor demamd

---

Definitions:

Conversion Cost

The combined costs of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.

Weighted-Average Method

A cost accounting method that calculates the cost per unit by dividing the total cost by the total number of units produced, considering the weight of each batch.

Conversion Cost

The cost incurred to convert raw materials into finished goods, including labor and manufacturing overhead costs.

Process Costing

A costing method used for homogeneous products, where costs are accumulated over a period and assigned to units produced, typically in manufacturing.