With Sticky Prices, in the Stylized DSGE Model, Firms ________

question 53

Multiple Choice

With sticky prices, in the stylized DSGE model, firms ________ and labor demand is ________.

• A) agree to produce what is demanded; vertical
• B) must update their expectations; equal to the marginal product of labor
• C) use adaptive expectations; horizontal
• D) produce at the natural rate of output; downward sloping
• E) supply at marginal cost; perfectly competitive

---

Definitions:

Implied Warranty

A legal assumption that a product or service sold will meet basic quality and functionality standards.

Merchantability

A warranty that the goods sold meet reasonable expectations for use, including being fit for the purpose for which they are sold.

Hardware Store

A retail business specializing in selling hardware items, such as tools, building materials, and gardening equipment.

Unconditional Right

A legal entitlement or claim that is not subject to any conditions or restrictions.