Multiple Choice
Suppose the price level falls but because of fixed nominal wage contracts, the real wage rises and firms cut back on production. This is a demonstration of the
A) sticky-wage theory of the short-run aggregate supply curve.
B) classical dichotomy theory of the short-run aggregate supply curve.
C) misperceptions theory of the short-run aggregate supply curve.
D) sticky-price theory of the short-run aggregate supply curve.
Correct Answer:
Verified
Correct Answer:
Verified
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