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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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