Equal the quantity demanded of that good or service

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equal the quantity demanded of that good or service. If prices were always flexible and capable of rapid adjustment, then dealing with situation in which quantities demanded did not equal quantities supplied would always be easy since prices could simply adjust to the market equilibrium price at which quantities demanded equal quantities supplied. Stick prices combine with shocks to drive short-run fluctuations in output and employment.
LO 6.5—Characterize the degree to which various prices in the economy are sticky.
LO 6.6—Explain why the greater flexibility of prices as time passes causes economists to utilize different macroeconomic models for different time horizons.
LO 7.1—Explain how GDP is defined and measured.

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