The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected,some firms will 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 service 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

Question

Quizplus · Accepted Answer

When the price level is higher than expected, some firms with sticky prices will have lower than desired prices, making their goods relatively cheaper, which leads to an increase in the aggregate quantity of goods and services supplied.

The Sticky-Price Theory of the Short-Run Aggregate Supply Curve Says