The more flexible prices are, the
A) greater demand shifts have to be to bring about a new equilibrium.
B) larger the shifts in supply will be after a change in demand.
C) greater the reliance by sellers to change the nominal price.
D) more quickly a shock to the economy can be absorbed.

Question

Quizplus · Accepted Answer

When prices are flexible, they can adjust quickly to changes in demand or supply shocks, helping to restore equilibrium in the market. This means that any shock to the economy can be absorbed more quickly, making D the correct answer.

The More Flexible Prices Are, the