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Consider the Following Short Run Aggregate Supply Equation

Question 2

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Consider the following short run aggregate supply equation:
Consider the following short run aggregate supply equation:     , where Y is the real output is    the full employment output, P and P<sup>e</sup> are the actual and expected price levels, respectively. Which of the following is correct? A)  In the Keynesian model, P is always greater than P<sup>e</sup> because of sticky-wage assumption. B)  In the Keynesian model, P is always equal to P<sup>e</sup> because of sticky-wage assumption. C)  In the Keynesian model, P is always less than P<sup>e</sup> because of sticky-wage assumption. D)  In the Keynesian model, P may be different than P<sup>e</sup> because of sticky-wage assumption<sup>.</sup> , where Y is the real output is Consider the following short run aggregate supply equation:     , where Y is the real output is    the full employment output, P and P<sup>e</sup> are the actual and expected price levels, respectively. Which of the following is correct? A)  In the Keynesian model, P is always greater than P<sup>e</sup> because of sticky-wage assumption. B)  In the Keynesian model, P is always equal to P<sup>e</sup> because of sticky-wage assumption. C)  In the Keynesian model, P is always less than P<sup>e</sup> because of sticky-wage assumption. D)  In the Keynesian model, P may be different than P<sup>e</sup> because of sticky-wage assumption<sup>.</sup> the full employment output, P and Pe are the actual and expected price levels, respectively. Which of the following is correct?


A) In the Keynesian model, P is always greater than Pe because of sticky-wage assumption.
B) In the Keynesian model, P is always equal to Pe because of sticky-wage assumption.
C) In the Keynesian model, P is always less than Pe because of sticky-wage assumption.
D) In the Keynesian model, P may be different than Pe because of sticky-wage assumption.

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