The Imperfect-Information Model Bases the Difference in the Short-Run and Long-Run

question 81

Multiple Choice

The imperfect-information model bases the difference in the short-run and long-run aggregate supply curve on:

• A) sticky wages.
• B) sticky prices.
• C) temporary misperceptions about prices.
• D) procyclical real wages.

---

Definitions:

Profit

is the financial gain realized when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Bid-ask Margin

The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask), indicative of market liquidity.

Market Maker

An entity that buys and sells securities from their own inventory, ensuring liquidity and trading activity in financial markets.

Fracking

A technique for extracting oil and natural gas from rock by injecting high-pressure fluid to create fractures, allowing resources to be more easily harvested.