Question

The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have

higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.
lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied
higher than desired prices, which leads to a decrease in the aggregate quantity of goods and service supplied.
lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.

Answer 1

Answer: The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.

Explanation: The sticky-price theory or stickiness of a price happens when the price of a good does not change exactly when the market-clearing price changes. Although demand and supply will change and the price fluctuates accordingly, it does not happen the second there is a noticeable change.