Quizzol

QUESTION:

Suppose the price level falls. Because of fixed nominal wage contracts, firms become less profitable and they cut back on production. This is a demonstration of the _______.

a. sticky-wage theory of the short-run aggregate-supply curve

b. sticky-price theory of the short-run aggregate-supply curve

c. misperceptions theory of the short-run aggregate-supply curve

d. classical theory of the long-run aggregate-supply curve

ANSWER:

a. sticky-wage theory of the short-run aggregate-supply curve

Posted by Cleveland on September 10, 2024