A Classical Objection to Keynesian Sticky Price Models Is That

question 12

Multiple Choice

A classical objection to Keynesian sticky price models is that

• A) it is easier for firms to change prices rather than change output.
• B) it is cheaper for firms to change output rather than change prices.
• C) sticky price models are internally inconsistent.
• D) real shocks are more important than nominal shocks.

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Definitions:

Annual Interest Payment

The total amount of interest paid over one year on a loan, bond, or other financial instrument.

Debtor To Creditor

A financial ratio that compares the amount of debt a company owes to the amount it owes to creditors; often used to evaluate a company's financial leverage.

Yield To Call

The yield to call is the return an investor would receive if they held a bond until its call date, when the issuer has the option to repay the bond before its maturity date at a specified price.

Nominal Yield

The yearly interest income from a bond or fixed-income security, expressed as a percentage of the bond's face value.