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Sticky Wages and Prices: Effect on Equilibrium

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Prices in the economy can be sticky because of things like _____

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1. Which of the following is an inaccurate explanation of why wages are sticky?

2. What does the term 'sticky prices' mean?

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About This Quiz & Worksheet

Use this interactive worksheet and quiz combo as a pre-test or review for our lesson on the effects of sticky wages and prices on equilibrium. You will improve your understanding of the way static prices and wages affect employment and the economy during difficult times.

Quiz & Worksheet Goals

This worksheet and quiz will assess your knowledge of the following:

  • Definition of sticky prices and wages
  • Reasons why sticky wages exist
  • The impact of sticky wages and prices on full employment

Skills Practiced

Use these skills when working with the worksheet and quiz:

  • Reading comprehension - ensure that you draw the most important information from the related sticky prices and wages lesson
  • Making connections - use understanding of the connection between prices and the economy
  • Information recall - access the knowledge you've gained regarding behaviors of consumers during tough times

Additional Learning

The corresponding lesson Sticky Wages and Prices: Effect on Equilibrium will prepare you to:

  • Describe the correlation between sticky wages and prices and an economy in recession
  • List some reasons why wages tend to stay sticky
  • Discuss John Maynard Keynes observation concerning full employment
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