In the short run with a model with sticky prices a positive monetary surprise:

Question

Quizplus · Accepted Answer

In the short run with a model featuring sticky prices, a positive monetary surprise (such as an unexpected increase in the money supply) can lead to an increase in labor demand as firms ramp up production in response to higher expected sales. This increase in labor demand, in turn, drives up real output as more goods and services are produced. Additionally, the increase in labor demand can lead to an increase in the real wage, as firms are willing to pay more to attract the necessary labor. Thus, all of the options provided are correct outcomes of a positive monetary surprise in the short run under a sticky price model.

In the Short Run with a Model with Sticky Prices