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What did Keynes mean when he said that prices are​ sticky?

A. Prices need to be sticky or we would have cost-push inflation.

B. Prices are sticky because of cost-push inflation.

C. Prices are inflexible upward due to the aversion people have to higher prices.

D. Prices, especially the price of labor, are inflexible downward.

 

 

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Sonal Bahl
Sonal BahlLv10
31 Oct 2020

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Related questions

two characteristics of oligopoly pricing that have frequently been observed are that:

A. oligopolists tend to practice a lot of price discrimination, and there tends to be a wide variance in oligopoly pricing.

B. oligopolistic firms' prices tend to fluctuate a lot, and these prices tend to move together with each other.

C. oligopolistic firms' prices tend to fluctuate a lot, and there tends to be a wide variance in oligopoly pricing.

D. oligopolistic prices tend to be "sticky" or inflexible, and when the firms do change their prices, they tend to do so together.

Please help wtih these economics questions. I'll give the best answer to the person who justifies their answer.. or someone who does well in economics and knows the subject area well.

Which of the following statements is not true about Say's Law?

A. People produce more goods than they want for their own use only if they seek to trade them for other goods.

B. Markets would be regularly hit by severe shortages and surpluses.

C. Desired expenditures will equal actual expenditures.

D. Surpluses will be eliminated by falling prices and shortages will be eliminated by increasing prices.


Which of the following is not an assumption of the classical model?

A. Buyers and sellers react to changes in relative prices.

B. Households want to maximize economic well being.

C. Wages and prices will move freely in the upward direction but not the downward direction.

D. No single buyer or seller of a commodity can affect its price.


Money illusion is

A. when people think they are better off when their income increases even though prices have increased by the same amount.

B. when people are motivated by self-interest.

C. could not exist if the economy did not have competitive markets.

D. a basic condition that all classical economists assume people have.


Saving is not a problem in the classical model because

A. interest rates were flexible and savings were channeled into investment.

B. savers and investors were the same people.

C. the classical economists assumed that saving was beneficial to people for retirement.

D. saving would be spent by consumers eventually.


Which of the following statements is true?

A. There is an inverse relationship between investment and the interest rate.

B. There is no relationship between investment and the interest rate.

C. There is a direct relationship between investment and the interest rate.

D. Investment is always less than savings.


In the classical model, high unemployment due to either a demand or a supply shock

A. will return to its normal level quickly as wages adjust.

B. will persist if due to a supply shock but not if due to a demand shock.

C. can persist for an indefinite period of time.

D. never exists because unemployment can never deviate from its normal level.


The classical model makes little distinction between the long-run and short-run because

A. the model has not been fully developed yet.

B. prices adjust so fast that the economy is quickly moving towards the long-run.

C. the classical economists knew that we are always operating in the short run.

D. current changes influence the long run, so it is not possible to plan for the future.


In the classical model

A. the level of real GDP per year does not depend on the level of aggregate demand.

B. the level of GDP is demand determined.

C. the level of GDP determines prices independent of demand.

D. changes in aggregate supply affect the price level, not real GDP.


Which of the following is a true statement?

A. Classical economists believed output adjusted more than prices when aggregate demand fell while Keynes believed prices adjusted more than output.

B. Classical economists believed price adjusted more than output when aggregate demand fell while Keynes believed output adjusted more than prices.

C. A decrease in aggregate demand has no short-run effects according to the classical economists, but had significant effects according to Keynes.

D. A decrease in aggregate demand was not possible according to the classical economists, but was possible according to Keynes.


Which of the following is not a reason why GDP can be expanded beyond a level consistent with its long-run growth path in modern Keynesian analysis?

A. Prices and wages are flexible allowing for needed adjustments.

B. In the short-run existing workers can work more hours.

C. The existing capital stock can be used more intensively.

D. Higher prices induce firms to hire more workers.


A recessionary gap can be caused by

A. a decrease in aggregate supply holding aggregate demand constant.

B. an increase in aggregate demand holding aggregate supply constant.

C. an increase in the long run aggregate supply curve holding the aggregate demand constant.

D. a decrease in both aggregate demand and aggregate supply.



Here's a compelling new reason to diet: You'll worry less about inflation. Rising costs for agricultural commodities are making their way up the food chain into the food you eat. Thanks to the rising demand for corn-based ethanol, corn prices have nearly doubled during the past year. That's raised costs for corn products, like the ubiquitous high-fructose corn syrup that's used to sweeten everything from Apple Jacks to Yoplait Yogurt. It's also raised costs for livestock and poultry, which are fed corn, and for crops like soybeans, which farmers are replacing so they can grow more corn. Yesterday, the Labor Department reported February prices for "crude foodstuffs and feedstuffs" were 18.8% above year-ago levels. Food companies are starting to pass those higher costs on - wholesale consumer food prices were 6.8% above year-ago levels. Today's report on consumer inflation will probably show higher prices at the checkout line, too. The Federal Reserve likes to strip out volatile food and energy prices when looking at inflation. Unfortunately, food companies can't do that. It's true that labor costs are a much bigger cost for them than corn costs. But many food producers operate on such slim profit margins that any increase in costs can pinch. Their inclination will be to do what gum maker Wrigley on Wednesday said it would do - pass the costs on. Wrigley is raising U.S. prices by about 10%, meaning it's consumers who will feel the pinch.

4. Do you think Wrigleys will raise or lower their total revenue by raising prices? Explain your answer using my favorite term.

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