For Each of the Two Models of Short-Run Aggregate Supply

question 95

Essay

For each of the two models of short-run aggregate supply (sticky price and imperfect information)compare the following characteristics:
a.whether the market imperfection is located in the goods market or the labour market
b.whether prices are flexible or fixed
c.whether the goods market and the labour market clear instantly.

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Definitions:

Government Funds

Financial resources allocated by the government for specific purposes, often aimed at public projects or to aid sectors of the economy.

Subsidiaries

Companies that are completely or partly owned and partly or wholly controlled by another company, known as the parent company.

Demand-Pull Inflation

occurs when prices rise because the demand for goods and services exceeds supply.

Price of Houses

The amount of money required to purchase residential properties, influenced by factors such as location, size, and market conditions.