According to the Sticky-Price Model, Other Things Being Equal, the Greater

question 12

Multiple Choice

According to the sticky-price model, other things being equal, the greater the proportion, s, of firms that follow the sticky-price rule, the ______ the ______ in output in response to an unexpected price increase.

• A) greater; increase
• B) smaller; increase
• C) greater; decrease
• D) smaller; decrease

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Definitions:

Group Polarization Effect

The tendency for a group's prevailing opinions to become more extreme following group discussion.

Risky Shift

The phenomenon where groups collectively decide on riskier actions or decisions than individuals would make on their own.

Believe More Strongly

The increased conviction or acceptance in the truth or existence of something.

Group

A collection of individuals who interact with one another, share similar characteristics, and collectively have a sense of unity or identity.