In the short run, nominal wages and other input prices are assumed to be
A) unresponsive to product price-level changes, but in the long run they are assumed to be responsive.
B) unresponsive to product price-level changes, and in the long run they are assumed to be unresponsive also.
C) responsive to product price-level changes, but in the long run they are assumed to be unresponsive.
D) responsive to product price-level changes, and in the long run they are assumed to be responsive also.

Question

Quizplus · Accepted Answer

In the short run, nominal wages and other input prices are often assumed to be sticky or unresponsive to changes in the product price level, meaning they do not adjust immediately. However, in the long run, these prices are assumed to be more flexible and responsive to changes in the product price level, allowing for adjustments in wages and input costs in response to economic conditions.

In the Short Run, Nominal Wages and Other Input Prices