In the short run, we assume that the money prices of goods and services are
A) temporarily fixed.
B) permanently fixed.
C) allowed to fluctuate.
D) equal to long-run prices.
E) fully employed.

Question

Quizplus · Accepted Answer

In the short run, we assume that money prices of goods and services are temporarily fixed. This is because prices may take time to adjust to changes in supply and demand, so they may not immediately reflect the true value of goods and services in the market. This is why we often observe price stickiness in the short run.

In the Short Run, We Assume That the Money Prices