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:

Dual-Coding Hypothesis

The assertion that long-term memory can code information in two distinct ways, verbally and visually, and that items coded both ways (e.g., pictures and concrete words) are more easily recalled than items coded in only one way (e.g., abstract words).

Remember

The cognitive process of recalling information or experiences from the past.

Word Pairs

A method used in memory studies, where two words are presented together as a pair to be remembered by the participant.

Mirror Image Reversal

The phenomenon where an image or object is reversed from left to right, as seen in a mirror reflection.