Which of the following statements best describes price flexibility in the economy?
A)Prices tend to be sticky in the short run and stuck in the long run.
B)Prices tend to be just as sticky in the short run as in the long run.
C)Prices tend to be sticky in the short run but become more flexible over time.
D)Prices tend to be flexible in the short run but become more sticky over time.

Question

Quizplus · Accepted Answer

In the short run, prices are often sticky due to contracts, menu costs, and other frictions, but over time, these factors adjust, allowing prices to become more flexible.

Which of the Following Statements Best Describes Price Flexibility in the Economy