In the aggregate demand and aggregate supply model,sticky wages,sticky prices,and misperceptions about relative prices
A)have temporary effects.
B)explain why the short run aggregate supply curve might shift.
C)explain why the aggregate demand curve is downward sloping.
D)explain monetary neutrality.

Question

Quizplus · Accepted Answer

Sticky wages, sticky prices, and misperceptions about relative prices have temporary effects because they can cause short-term deviations from the long-run equilibrium, but over time, wages and prices adjust, and misperceptions are corrected.

In the Aggregate Demand and Aggregate Supply Model,sticky Wages,sticky Prices,and