Because Prices Change Too Slowly in the Short-Run and as a Result

question 36

Multiple Choice

Because prices change too slowly in the short-run and as a result, they do not quickly equalize the quantity demanded and quantity supplied of goods and services, the short-run response of the economy to a demand shock is through:

• A)changes in output and employment levels rather than through changes in prices.
• B)changes in prices rather than through changes in employment.
• C)changes in employment but not in output.
• D)changes in output but not in the employment.

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Definitions:

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