Question
If an economy has sticky prices and demand unexpectedly increases, you would expect the economy’s real GDPto:a. Increase.b. Decrease.c. Remain the same.
Step 1
Sticky prices are prices that do not respond immediately to changes in the economy. In this case, the economy has sticky prices and demand unexpectedly increases. Show more…
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If an economy has sticky prices and demand unexpectedly increases, you would expect the economy’s real GDP to: a. Increase. b. Decrease. c. Remain the same.
If an economy has fully flexible prices and demand unexpectedly increases, you would expect that the economy’s real GDP would tend to: a. Increase. b. Decrease. c. Remain the same.
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