What is meant by the phrase "prices are sticky"?
A) In the short run,suppliers expect future prices to remain constant.
B) In the short run,contracts,loans,and wages are often fixed.
C) In the long run,contracts,loans,and wages are often fixed.
D) In the long run,suppliers expect future prices to remain constant.
E) In the long run,people demand constant real wages.

Question

Quizplus · Accepted Answer

Sticky prices refer to the fact that in the short run, prices of goods and services are often slow to adjust to changes in supply and demand. This is because contracts, loans, and wages are often fixed in the short run, making it difficult for companies to adjust their prices. Therefore, option B is the best choice as it accurately describes the concept of sticky prices.

What Is Meant by the Phrase "Prices Are Sticky