Question

The sticky-price theory implies that Select one: a. an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce. b. All of the above are correct. c. the short-run aggregate-supply curve is upward-sloping. d. menu costs influence the speed of adjustment of prices.

Answer 1

Answer:

b. All of the above are correct.

Explanation:

Sticky prices refer to the prices that are resistant to change. It remain the same when the demand is increased or not. Neither they fluctuate when there is the change in the production cost so overall we can interpet that it remains the constant whether the other factors like demand, production cost changed or not

Therefore the option b is correct