Question

In theory, prices should always adjust such that quantity supplied equals quantity demanded. However, in the macroeconomy a situation of excess supply may exist for an extended period of time. Such a situation is caused by __________.

Answer 1

wages and prices that do not respond to decreases in demand.

Step-by-step explanation:

As we know that the price is always adjusted to equate the quantity supplied with the quantity demanded

but in the case of the macroeconomy the situation of the excess supply is already existed for a longer period this is caused in the case of the wages and prices when they are not able to respond when there is a reduction in the demand

Therefore the same is to be considered