Which of the Following Is a Key Assumption in Mankiw's

question 42

Multiple Choice

Which of the following is a key assumption in Mankiw's model of price stickiness?

• A)people have adaptive expectations
• B)the private benefits from changing prices are smaller than the social benefits
• C)GDP will never return to trend after a disturbance
• D)firms do not have enough market power to set their own prices
• E)markets always clear immediately

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