A Classical Objection to Keynesian Sticky Price Models Is That

question 60

Multiple Choice

A classical objection to Keynesian sticky price models is that

• A) it is easier for firms to change prices rather than change output.
• B) it is cheaper for firms to change output rather than change prices.
• C) sticky price models are internally inconsistent.
• D) real shocks are more important than nominal shocks.
• E) nominal wages are always fixed.

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Definitions:

Bonds

Financial instruments representing loans made by investors to borrowers, typically governments or corporations, with an agreed-upon return.

Obligations

Obligations are duties or commitments legally or morally binding an individual or entity to act or refrain from acting in a certain manner.

Gunpowder

A mixture of saltpeter (potassium nitrate), sulfur, and charcoal (carbon) that when ignited, burns rapidly and is used as a propellant in firearms and as an explosive.