Author Question: The cost to firms of changing prices A) is called a menu cost. B) is small even when there is ... (Read 120 times)

lb_gilbert · **on:** Jun 29, 2018

The cost to firms of changing prices

A) is called a menu cost.
B) is small even when there is rapid inflation.
C) does not exist if inflation is perfectly anticipated.
D) all of the above

Question 2

Refer to Figure 27-1. Suppose the economy is in short-run equilibrium above potential GDP and wages and prices are rising.

If contractionary policy is used to move the economy back to long run equilibrium, this would be depicted as a movement from ________ using the static AD-AS model in the figure above.
A) B to A B) A to E C) C to B D) E to A E) D to C