Difference between revisions of "Sticky prices"
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Revision as of 01:49, May 18, 2011
Sticky prices are prices resistant to changes in demand. Nominal wages are proposed as an example of sticky prices, on the theory that wages do not increase as quickly as they should, perhaps due to inertia, stubbornness or self-interest.
Supporters of the concept of sticky prices cite four causes: imperfect information, menu costs, money illusion and even fairness (communism).