Multiple Select Question

Question

Select all that apply

Select all the choices that result from the difference in stickiness levels of input and output prices.
Multiple select question.

Output prices adjust more rapidly than input prices.

The relationship between price level and total output is different in each time horizon.

Input and output prices are both fixed in the immediate short run.

Input and output prices become less flexible over time.

Answer 1

The correct selections that result from the difference in stickiness levels of input and output prices are:

1. Output prices adjust more rapidly than input prices.
2. The relationship between price level and total output is different in each time horizon.
3. Input and output prices are both fixed in the immediate short run.

The fourth choice, Input and output prices become less flexible over time, is not correct in the context of the stickiness levels discussion, as it suggests that prices become more rigid, which is generally not the case as we move from the short run to the long run where prices tend to adjust more fully.