Based on the sticky-price model, the short-run aggregate supply curve will be steeper, the greater the:
A) target nominal-wage rate.
B) target real-wage rate.
C) proportion of firms with flexible prices.
D) proportion of firms with sticky prices.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve is steeper when a greater proportion of firms have flexible prices, as these firms can adjust their prices more readily in response to changes in demand or cost conditions.

Based on the Sticky-Price Model, the Short-Run Aggregate Supply Curve