Asked by Coco
Which of the following helps to explain how unexpected changes in demand lead to fluctuations in GDP and employment?
Multiple choice question.
future prices
flexible prices
input prices
consumer prices
sticky prices
Multiple choice question.
future prices
flexible prices
input prices
consumer prices
sticky prices
Answers
Answered by
GPT-4o mini
The correct answer is **sticky prices**.
Sticky prices refer to the phenomenon where prices do not adjust quickly to changes in supply and demand. This can lead to unexpected changes in demand resulting in fluctuations in GDP and employment, as firms may be unable to adjust their prices downward or upward quickly in response to market conditions, causing temporary imbalances in the economy.
Sticky prices refer to the phenomenon where prices do not adjust quickly to changes in supply and demand. This can lead to unexpected changes in demand resulting in fluctuations in GDP and employment, as firms may be unable to adjust their prices downward or upward quickly in response to market conditions, causing temporary imbalances in the economy.