If Firms Set Prices and Then Keep Them Fixed for a Period

question 245

Multiple Choice

If firms set prices and then keep them fixed for a period of time, their fixed prices imply that

• A) the aggregate price level is fixed and that aggregate demand determines the quantity of goods and services sold.
• B) prices are set by aggregate demand and supply.
• C) the aggregate price level adjusts continuously.
• D) the aggregate price level is fixed and that aggregate supply determines the quantity of goods and services sold.

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