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:

Draft

To compose or prepare a preliminary version of a document, plan, or proposal for discussion or review.

Fixed Amount

A specified sum of money that does not vary or change under certain conditions or over a certain period of time.

Hold

To maintain possession or control of something, or to defer a decision or action until further notice or information is received.

Funds

Financial resources set aside for a specific purpose, often pooled together from multiple sources and managed to achieve a specific investment goal.