What does the phrase "wages are sticky" mean?
A. Wages stick to unemployment rates.
B. Wages are always changing.
C. Wages never change.
D. It is difficult to change wages in the short term.
Answer: D
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The net effect of a stronger dollar on real GDP is
A) an increase in the price level. B) dependent on whether the increase in aggregate supply is more or less than the decrease in aggregate demand. C) a decrease in real GDP. D) an increase in real GDP.
A product's price elasticity of demand is likely to be greater
A) if it only has a few substitutes. B) if consumers spend a small proportion of income on the product. C) the less time consumers have to adjust to price changes. D) if the product is a luxury good rather than a necessity. E) Both answers C and D are correct.
Rent controls unintentionally create
A) scarcity of rental units. B) surpluses of rental units. C) shortages of rental units. D) market-clearing outcomes in the apartment rental market.
If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years?
A) 270% B) 50% C) 5% D) 2.7%