Define the following concepts: Sticky Prices Expansion and contraction Inflation, Deflation and Hyperinflation Fiscal Policy and Monetary Policy
- Define the following concepts:
- Sticky
Prices - Expansion and contraction
- Inflation, Deflation and Hyperinflation
- Fiscal
Policy and Monetary Policy
Sticky prices: it implies that the price remains constant despite the changes in the economy or that they resist the changes that could occur when other factors in the economy changes. The price change is not immediate and it might take time for the prices to adjust.
2) Expansion and contraction: These are the terms used to define the economic activities in the country or the phases in the business cycle. When there is an increase in the economic activities of the country, there is expansion. The aggregate demand of goods and services increases and there is an overall increase in production. This is when the economy is recovering from recession.
Contraction refers to a decline in the economic activities of the country. This is when the economy is at peak and is now experiencing a decline in aggregate demand and production of goods and services.
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