In the macroeconomic model developed in the book to describe the short- term behavior of the economy in the short run,
A) equilibrium must hold in product and labor markets.
B) the price level adjusts to clear goods markets.
C) output adjusts to spending disturbances.
D) all of the above.
E) a and b only.

Question

Quizplus · Accepted Answer

In the short run, output adjusts to spending disturbances as prices and wages are typically sticky, preventing immediate market clearing.

In the Macroeconomic Model Developed in the Book to Describe