All of the Following Statements About Sticky Prices Are True

question 17

Multiple Choice

All of the following statements about sticky prices are true except:

• A) in the short run, some wages and prices are sticky.
• B) the sticky-price model describes the equilibrium toward which the economy slowly gravitates.
• C) for studying year-to-year fluctuations, most macroeconomists believe that price stickiness is a better assumption than is price flexibility.
• D) magazine publishers tend to change their newsstand prices only every three or four years.

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Definitions:

Collection Agencies

Companies that pursue payments of debts owed by individuals or businesses, typically on behalf of creditors.

Statute of Limitations

The law that sets the maximum time after an event within which legal proceedings may be initiated.

Truth in Lending Act (TILA)

A federal law designed to promote informed use of consumer credit by requiring disclosures about its terms and cost.

Finance Charges

Fees represented as the cost of credit to the borrower, which includes interests and other charges.