If wages are sticky, then a greater than expected increase in the price level Group of answer choices reduces the real costs of production, so the aggregate quantity of goods and services rises. raises the real costs of production, so the short-run aggregate supply curve shifts left. raises the real costs of production, so the aggregate quantity of goods and services declines. reduces the real costs of production, so the short-run aggregate supply curve shifts right.

reduces the real costs of production, so the short-run aggregate supply curve shifts right.

Explanation:

The sticky-wage model or theory is an economical concept used to describe how in reality, wages may go up easily but slowly moves down and stays above the equilibrium because workers are resistant to nominal wage cut. This model was developed by John Maynard Keynes and he posited that, sticky-wage may lead to real-wage unemployment, as well as causing disequilibrium in the labor market.

In order to understand both short-run economic fluctuations and how the economy move from short to long run, we need the aggregate supply and aggregate demand model.

An aggregate supply curve gives the relationship between the aggregate price level for goods or services and the quantity of aggregate output supplied in an economy at a specific period of time.

If wages are sticky, then a greater than expected increase in the price level reduces the real costs of production, so the short-run aggregate supply curve shifts right.

In the short-run, a rightward shift in the aggregate supply (AS) curve causes output to increase and result in a price fall (lower price). The short-run nominal fluctuations basically cause a change in the level of production. In the short-run, as a result of a shift in the aggregate supply; an increase in money consequently to result in increase the level of production (output).

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