As Wages and Prices Become More Sticky ________

question 27

Multiple Choice

As wages and prices become more sticky ________.

• A)inflation becomes more responsive to unemployment deviations from the natural rate
• B)wages become less responsive to unemployment deviations from the natural rate
• C)it becomes more difficult to differentiate the short-run from the long-run Phillips curve
• D)all of the above
• E)none of the above

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Definitions:

Perfectly Competitive Firm

A company that cannot control market prices and must therefore accept the prevailing market price for its products or services.

Short-run

A period in economics during which some factors of production or inputs are fixed, unable to be changed to respond to market conditions.

Marginal Revenue Curve

A graphical representation that shows how much additional revenue a firm will make by selling one more unit of a product.

Perfectly Competitive Firm

A company operating in a market where there are many sellers and buyers, the product is homogeneous, and there are no barriers to entry or exit.