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

question 13

Multiple Choice

Each of the two models of short-run aggregate supply is based on some market imperfection. In the sticky-price model, the imperfection is that:

• A) some firms do not adjust their prices instantly to changes in demand.
• B) expectations are formed adaptively rather than rationally.
• C) firms confuse changes in the overall level of prices with changes in relative prices.
• D) the real wage adjusts to bring labor supply and labor demand into equilibrium.

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Definitions:

Bleach Solution

A liquid mixture containing bleach, typically used for disinfecting or whitening purposes.

Respiratory Etiquette

The practice of minimizing the spread of respiratory pathogens through certain behaviors, such as covering the mouth and nose with a tissue when coughing or sneezing.

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Practices and conditions that help maintain health and prevent the spread of diseases, primarily through cleanliness and sanitation.

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