Consider the Following Short Run Aggregate Supply Equation: Y = $\hat Y$

Multiple Choice

Consider the following short run aggregate supply equation: Y = $\hat Y$ + b (P - Pᵉ) ,where Y is the real output, $\hat Y$ is the full employment output,P and Pᵉ are the actual and expected price levels,respectively.Which of the following is correct?

A) In the Keynesian model,P is always equal to Pᵉ because of sticky-wage assumption.
B) In the Keynesian model,P may be different than Pᵉ because of sticky-wage assumption.
C) In the Keynesian model,P is always greater than Pᵉ because of sticky-wage assumption.
D) In the Keynesian model,P is always less than Pᵉ because of sticky-wage assumption.