To Study Macroeconomics, One Needs Various Models with Different Assumptions

question 53

Multiple Choice

To study macroeconomics, one needs various models with different assumptions about the flexibility and/or stickiness of price levels.This is because:

• A)the economy behaves similarly to demand shocks regardless of the length of time.
• B)the price flexibility is a short-run phenomenon while, the price stickiness is a long-run phenomenon.
• C)the economy behaves so differently depending on how much time has passed after a demand shock.
• D)various government policies are useless to eliminate the effects of an unexpected demand shock.

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Definitions:

Global Output

The total value of goods and services produced worldwide over a specific time period.

Percent

A part or portion of a whole expressed as a fraction of 100.

Increase

A rise or growth in quantity, size, intensity, or extent of a particular object or phenomenon.

Modernization Theory

is a sociological theory that looks at the processes through which societies move from traditional or less developed institutions to those characteristic of more developed societies.