To Study Macroeconomics, One Needs Various Models with Different Assumptions

question 53

Multiple Choice

To study macroeconomics, one needs various models with different assumptions about the flexibility and/or stickiness of price levels.This is because:

• A)the economy behaves similarly to demand shocks regardless of the length of time.
• B)the price flexibility is a short-run phenomenon while, the price stickiness is a long-run phenomenon.
• C)the economy behaves so differently depending on how much time has passed after a demand shock.
• D)various government policies are useless to eliminate the effects of an unexpected demand shock.

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Definitions:

Good Faith

The honest intention to act without taking an unfair advantage over another party, typically implied in agreements and transactions to ensure fairness and integrity.

Defects

Imperfections or faults in a product or structure that may affect its usability, safety, or function.

Negotiable Instruments

Financial documents that guarantee the payment of a specific amount of money, either on demand or at a set time.

Bills of Exchange

Financial instruments where one party orders another to pay a fixed sum to a third party at a specified time.