According to the sticky-price model, deviations of output from the natural level are _____ deviations of the price level from the expected price level.
A) positively associated with
B) negatively associated with
C) not related to
D) equal to

Question

Quizplus · Accepted Answer

According to the sticky-price model, prices are slow to adjust to changes in demand or supply, leading to temporary deviations of output from the natural level. These deviations are positively associated with deviations of the price level from the expected price level.

According to the Sticky-Price Model, Deviations of Output from the Natural