To say that nominal prices are sticky means
A) the average price level seldom changes.
B) relative prices seldom change.
C) it takes at least one year for prices to change to a new equilibrium level.
D) it takes time for prices to adjust to equilibrium.

Question

Quizplus · Accepted Answer

Nominal prices being sticky means that they don't adjust immediately to changes in supply or demand, but instead take time to reach a new equilibrium level. This is because businesses may face costs in adjusting prices, such as printing new menus or changing price tags, and may also worry about customer backlash from sudden price changes. Therefore, the best answer is D, which reflects the time it takes for prices to adjust to a new equilibrium level.

To Say That Nominal Prices Are Sticky Means