Macroeconomic models:
A) assume all wages and prices are sticky.
B) assume all wages and prices are flexible.
C) make different assumptions to explain different aspects of the macroeconomy.
D) focus primarily on the optimizing behaviour of households and firms.

Question

Quizplus · Accepted Answer

Macroeconomic models make different assumptions to explain different aspects of the macroeconomy. Some models assume sticky wages and prices, while others assume flexible wages and prices. Additionally, macroeconomic models can focus on different aspects of the economy, such as optimizing behaviour of households and firms or interactions between different sectors.

Macroeconomic Models