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Author Question: Suppose that demand for a product falls, but prices are sticky. What is likely to happen to prices ... (Read 172 times)

Kikoku

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on: Jun 30, 2018
Suppose that demand for a product falls, but prices are sticky. What is likely to happen to prices and output in that market, in the short run?
 
  What will be an ideal response?

Question 2

Which of the following statements is TRUE?
 
  A) The voting power of a nation in the International Monetary Fund is determined by its quota subscription.
  B) The voting procedure in the International Fund is determined by the World Bank.
  C) The voting power of a nation in the International Monetary Fund is called special drawing rights.
  D) All nations that belong to the International Monetary Fund have equal voting power.
Macroeconomics: Principles, Applications and Tools ¦ O'Sullivan, Sheffrin, Perez ¦ 7th Edition
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tanna.moeller

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Reply #1 on: Jun 30, 2018
Answer to Question 1

If prices are not flexible, they may not immediately adjust downward in response to the decrease in demand. So in the short run, prices may stay constant, and output might fall by more than would have happened if prices were flexible.

Answer to Question 2

A


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