In the short run, the quantity of output that firms supply can deviate from the natural rate of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen.For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will ___(Remain the same/fall/rise), and firms that rely on catalogs will respond by _ (Increasing/Reducing) the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected decrease in the price level causes the quantity of output supplied to ____ (Fall below/Rise above) the natural rate of output in the short run.

Question

04-12-2019
Business

contestada

In the short run, the quantity of output that firms supply can deviate from the natural rate of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen.For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will ___(Remain the same/fall/rise), and firms that rely on catalogs will respond by _ (Increasing/Reducing) the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected decrease in the price level causes the quantity of output supplied to ____ (Fall below/Rise above) the natural rate of output in the short run.

Respuesta :

Otras preguntas

In the statement “Look on my works, ye Mighty, and despair!” (line 11) Ozymandias is speaking to __________________. Question 46 options: a) the traveler b)

Question: the following statements are true about your hamstrings except for: a-the hamstring can be strengthened to reduce energy but can not advance in mass b

FGH and HGJ form a linear pair. Find the measurement of the anglesif FGH=11x and HGJ+(6x-7)

the lenghts of five boxes are shown in the table which line plot shows the data from the table

(10/2)x7+5-4 whats the answer

A solid sphere is cut into 12 equal wedges. The volume of each wedge is V=³. Solve the formula for r.

Consider this sphere with a diameter of 12 cm. a sphere with diameter 12 centimeters. what is the volume of the sphere? sphere v = four-thirds pi r cubed 24pi c

Using the information in the table, calculate the number of formula units in a 62.2 g sample of aluminum sulfide (Al2S3)

Please help todays last day of school 100 points! Which danger does this article suggest that a person who becomes dangerously overheated faces? A) scarlet feve

26.1.3 Quiz: Two-Variable Data and Scatterplots Question 8 of 10 Which of the following graphs shows a negative linear relationship with a correlation coefficie

truonghanhduyen truonghanhduyen · Answer 1 · 2019-12-05T02:45:02+01:00

Answer:

The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will remain the same, and firms that rely on catalogs will respond by increasing the quantity of output they supply.

If enough firms face high costs of adjusting prices, the unexpected decrease in the price level causes the quantity of output supplied to rise above the natural rate of output in the short run.

Explanation:

The inputs are based on the sticky-price theory, with explaination as below:

"In the short run, the quantity of output that firms supply can deviate from the natural rate of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level."