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

question 52

Multiple Choice

Each of the three 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) contracts and arrangements may prevent nominal wages from adjusting rapidly to changing economic conditions.
• C) firms confuse changes in the overall level of prices with changes in relative prices.
• D) the real wage adjusts to bring labour supply and labour demand into equilibrium.

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Definitions:

Economic Status

Economic Status refers to the position of an individual, group, or country in terms of financial and resource aspects, influencing living standards and opportunities.

Fair Value

An estimation of the market value of an asset or liability based on the current market prices or valuations of similar assets and liabilities.

U.S. Tax Laws

The body of law governing the administration of taxes on individuals, corporations, and other entities in the United States.

Deductibility

The ability of an expense to be subtracted from gross income to determine the taxable income, thus reducing the amount of tax owed.