Econ 320 Midterm 1 Review Questions
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1. All of the following are true about sticky prices except? a. In the short run, some wages and prices are sticky. b. The Sticky Price model describes the equilibrium towards which the economy slow... ly gravitates c. For studying year to year fluctuations, price stickiness is a better assumption than price flexibility d. Magazine publishers tend to change their newsstand prices only every 3-4 years 2. An assumption of sticky prices is more plausible for studying the short-run behavior of the economy, while an assumption of flexible is more plausible for studying the long-run, equilibrium behavior of the economy. [Show More]
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