The idea of sticky wages and prices is most closely associated with:
A) monetarism.
B) classical economics.
C) Keynesian economics.
D) rational expectations theory.

Question

Quizplus · Accepted Answer

Sticky wages and prices refer to the phenomenon where wages and prices do not adjust immediately to changes in supply and demand, leading to short-term fluctuations in output and employment. This idea is most closely associated with Keynesian economics, which emphasizes the importance of aggregate demand and the potential for government intervention to address economic downturns. Monetarism and classical economics, on the other hand, place greater emphasis on the role of money supply and long-run economic growth. Rational expectations theory suggests that individuals anticipate future changes in prices and wages, leading to immediate adjustments rather than sticky prices and wages.

The Idea of Sticky Wages and Prices Is Most Closely