Multiple Choice
Which of the following is a key assumption in Mankiw's model of price stickiness?
A) people have adaptive expectations
B) the private benefits from changing prices are smaller than the social benefits
C) GDP will never return to trend after a disturbance
D) firms do not have enough market power to set their own prices
E) markets always clear immediately
Correct Answer:
Verified
Correct Answer:
Verified
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