With a nominal price rigidity:
A) firms cannot charge the market clearing price.
B) all prices are the same.
C) wages are also always fixed.
D) inflationary expectations are constant.
E) monetary policy is transparent.

Question

Quizplus · Accepted Answer

Nominal price rigidity means that firms cannot adjust their prices immediately in response to changes in demand and supply conditions. This implies that firms may not be able to charge the market-clearing price, leading to either excess demand or excess supply in the market.

With a Nominal Price Rigidity