If output is above its natural rate, then according to sticky-wage theory
a. workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right.
b. workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left.
c. workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right.
d. workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left.
b
You might also like to view...
If an incumbent faces an identical potential entrant with no costs of entry, the incumbent will
A) produce the Cournot duopolist level of output. B) produce the Stackelberg leader level of output. C) set price equal to marginal cost. D) shut down.
At an equilibrium price, quantity demanded
a. exceeds quantity supplied. b. equals quantity supplied. c. is less than quantity supplied. d. Any of the above is possible.
The degree of income inequality produced by competitive markets, in Professor Rawls' view, is:
A. greater than the amount people would prefer. B. minor. C. acceptable. D. consistent with the ideal amount.
If an economy is operating efficiently and with full employment, the production of more of one commodity will necessarily lead to less of something else being produced because of:
A) the unlimited wants of people. B) perfectly adaptability of resources in the production of various goods. C) scarcity. D) the lack of money capital.