"Input-output" macroeconomics stresses that a change in nominal aggregate demand ________ produces an equal-proportional change in every firm's marginal cost,so that firms should consider indexing their price to nominal aggregate demand a very ________ pricing strategy.
A)need not,safe
B)need not,risky
C)must,safe
D)must,risky

Question

Quizplus · Accepted Answer

"Input-output" macroeconomics suggests that changes in nominal aggregate demand do not necessarily lead to equal-proportional changes in every firm's marginal cost. This variability makes indexing prices to nominal aggregate demand a risky strategy, as it does not guarantee stable margins or predictability in costs relative to prices.

"Input-Output" Macroeconomics Stresses That a Change in Nominal Aggregate Demand