For Each of the Two Models of Short-Run Aggregate Supply

question 55

Essay

For each of the two models of short-run aggregate supply (sticky price and imperfect information) compare the following characteristics:
a.the nature of the market imperfection that generates the short-run movements in output associated with unexpected movements in the price level.
b.whether prices are flexible or fixed.

---

Definitions:

External Validity

The extent to which the findings of a study can be generalized to other settings, populations, and times beyond the study conditions.

Independent Variable

A variable that is manipulated or changed in an experiment to see if it has an effect on the dependent variable.

Correlation Coefficient

A statistical measure that indicates the extent to which two or more variables fluctuate together, ranging from -1 to 1, where 1 means a perfect positive relationship, -1 means a perfect negative relationship, and 0 means no relationship.

Variables

Elements or factors that can change and affect the outcomes of scientific research or experiments.