What does it mean to characterize prices as sticky? that the aggregate price level tends to fluctuate wildly that prices do not change very easily that the aggregate price level is fixed that prices change frequently and there are few barriers to price movements that it is very difficult for policy makers to manipulate the aggregate price level

Question

Andres Galloway

Business

11 April, 08:58

What does it mean to characterize prices as sticky? that the aggregate price level tends to fluctuate wildly that prices do not change very easily that the aggregate price level is fixed that prices change frequently and there are few barriers to price movements that it is very difficult for policy makers to manipulate the aggregate price level

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Wendy Estes · Answer 1

that prices do not change very easily

Explanation:

In simple words, Price tightness or fixed prices or price resistance relates to a condition in which the value of a product does not instantly or readily adjust to the new business-clearing level as market forces of demand as well as supply curve changes.

The existence of price stickiness can be interpreted as an crucial part of macroeconomic analysis because it can clarify why short-term or even, probably, long-term markets do not achieve equilibrium.