If prices are sticky, the level of real GDP is determined by
A) the level potential output.
B) the level of the money supply.
C) the level of the stock market.
D) the level of planned total expenditure.

Question

Quizplus · Accepted Answer

When prices are sticky, the level of real GDP is primarily determined by the level of planned total expenditure. This is because sticky prices do not adjust quickly to changes in demand or supply, making the economy more responsive to changes in expenditure in the short run.

If Prices Are Sticky, the Level of Real GDP Is