Explain how menu costs affect the slope of the short-run aggregate supply curve
What will be an ideal response?
Menu costs make some prices sticky. As the price level rises, some firms will be reluctant to raise their prices. Sales at those firms will increase, and their output will increase. This creates the possibility that an increase in the price level will increase output. More menu costs can make the short-run aggregate supply curve flatter.
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If the base year for the GDP deflator is 2005 and the value of the deflator during 2011 is 115, this indicates that the general level of prices
a. declined by 15 percent between 2005 and 2011. b. increased by 15 percent each year during 2005-2011. c. was approximately 15 percent higher in 2011 than in 2005. d. was approximately 115 percent higher in 2011 than in 2005.
Equilibrium price is _____ and equilibrium quantity is ______ units.
A. $12; 20
B. $12; 30
C. $20; 20
D. $20; 30
A competitive market is one in which there
a. is only one seller, but there are many buyers. b. are many sellers, and each seller has the ability to set the price of his product. c. are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market. d. are so many buyers and so many sellers that each has a negligible impact on the price of the product.
In conceptual production functions, technological change is
A. not considered and is therefore assumed to be constant in all deliberations. B. treated like an addition to the capital stock. C. a factor that eliminates diminishing returns to a production function. D. treated as a movement upward along a given production function.