If There Are Sticky Wages,and the Price Level Is Greater

question 44

Multiple Choice

If there are sticky wages,and the price level is greater than what was expected,then

• A)the quantity of aggregate goods and services supplied falls,which is shown by a shift of the short-run aggregate supply curve to the left.
• B)the quantity of aggregate goods and services supplied falls,as shown by a movement to the left along the short-run aggregate supply curve.
• C)the quantity of aggregate goods and services supplied rises,as shown by a shift of the short-run aggregate supply curve to the right.
• D)the quantity of aggregate goods and services supplied rises,as shown by a movement to the right along the short-run aggregate supply curve.

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Definitions:

Law of Supply

It states that, all else equal, an increase in the price of a good or service will lead to an increase in the quantity supplied.

Law of Demand

An economic principle stating that the quantity demanded of a good decreases as its price increases, all else being equal, and vice versa.

Diminishing Marginal Utility

Diminishing marginal utility is the principle stating that as a person consumes more of a good, the satisfaction gained from consuming each additional unit decreases.

Income Effect

Refers to the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.