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.