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Question

Based on the sticky-price model, the short-run aggregate supply curve will be steeper, the greater

the_____

A target nominal-wage rate. Correct Answer Incorrect Answer
B target real-wage rate. Correct Answer Incorrect Answer
C proportion of firms with flexible prices. Correct Answer Incorrect Answer
D proportion of firms with sticky prices. Correct Answer Incorrect Answer
E All of the above Correct Answer Incorrect Answer

Solution

Based on the sticky-price model, the short-run aggregate supply curve will be steeper, the greater the proportion of firms with flexible prices.

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