Final answer:
When prices are sticky and there's an unexpected increase in gross investment, the aggregate supply curve will shift to the right, increasing economic output and exerting a downward pressure on prices.
Step-by-step explanation:
If prices are sticky and the number of dollars of gross investment unexpectedly increases, the aggregate supply (AS) curve will shift right.
In economics, particularly in the short run, prices can be sticky due to long-term contracts, menu costs, or slow adjustment of expectations. This means they do not always adjust immediately to changes in demand or supply. An increase in gross investment implies more money is injected into the economy for productive means, such as machinery, facilities, or technology, which increases potential output. In this framework, an unexpected increase in gross investment would typically cause a shift to the right of the short-run aggregate supply (SRAS) curve. A rightward shift in the SRAS suggests an increase in the total production or real GDP of an economy without a correspondingly large increase in the price level, especially if prices are sticky. The assumption here is that aggregate demand remains constant while supply increases, leading to more economic output at the same or slightly lower price levels due to productive efficiency. The result is a movement down along the aggregate demand curve, increasing real GDP and creating downward pressure on prices.