Rigidities in the Adjustment Process to Full Long-Run Equilibrium Arise

question 85

Multiple Choice

Rigidities in the adjustment process to full long-run equilibrium arise when:

• A) there is agreement among firms and workers that the inflation target is low.
• B) inflationary expectations are aligned with target rates.
• C) inflationary expectations veer away from target rates.
• D) long-term concerns about inflation seem to play a bigger role in economic decision

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method, or decision.

Smoking Risks

The potential adverse health consequences associated with tobacco use, including diseases like lung cancer, heart disease, and stroke.

Lung Cancer

is a type of cancer that originates in the lungs and is often associated with smoking and exposure to hazardous substances.

Framing

The way information is presented to influence perception and decision-making.