New Keynesian economists provide which two reasons for price stickiness in the short run?
A)Imperfect information and imperfect competition
B)Long-term contracts and imperfect competition
C)Long-term contracts and imperfect information
D)Long-term contracts and perfect competition

Question

Quizplus · Accepted Answer

New Keynesian economists provide two reasons for price stickiness in the short run - long-term contracts and imperfect competition. Long-term contracts make it difficult for firms to adjust their prices frequently, while imperfect competition reduces the pressure for firms to lower their prices in response to changes in demand. Imperfect information is also a reason for price stickiness, but it is not a primary explanation provided by New Keynesian economists. Perfect competition is not a reason for price stickiness.

New Keynesian Economists Provide Which Two Reasons for Price Stickiness