According to the Sticky Price Theory, SRAS curve is upward sloping because: Some firms are slow to respond to overall price level changes in the economy. All firms are slow to respond to overall price level changes in the economy. None of the firms respond to overall price level changes in the economy. O Some firms are slow to respond to overall technological changes in the economy. Which of the following correctly explains the sticky-wage effect? As wages are sticky in the short-run due to labor contracts, any increase in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run. As wages are sticky in the long-run due to labor contracts, any decrease in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run. O As wages are sticky in the long-run due to labor contracts, any decrease in price level increases the real wage, which in turn, reduces the cost of production for the firms and they decrease their demand in the short-run. As wages are sticky in the short-run due to labor contracts, any increase in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they increase their supply in the short-run.
According to the Sticky Price Theory, SRAS curve is upward sloping because: Some firms are slow to respond to overall price level changes in the economy. All firms are slow to respond to overall price level changes in the economy. None of the firms respond to overall price level changes in the economy. O Some firms are slow to respond to overall technological changes in the economy. Which of the following correctly explains the sticky-wage effect? As wages are sticky in the short-run due to labor contracts, any increase in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run. As wages are sticky in the long-run due to labor contracts, any decrease in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run. O As wages are sticky in the long-run due to labor contracts, any decrease in price level increases the real wage, which in turn, reduces the cost of production for the firms and they decrease their demand in the short-run. As wages are sticky in the short-run due to labor contracts, any increase in price level reduces the real wage, which in turn, reduces the cost of production for the firms and they increase their supply in the short-run.
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter33: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 4CQQ
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Transcribed Image Text:According to the Sticky Price Theory, SRAS curve is upward sloping because:
O Some fırms are slow to respond to overall price level changes in the economy.
All firms are slow to respond to overall price level changes in the economy.
None of the firms respond to overall price level changes in the economy.
Some fırms are slow to respond to overall technological changes in the economy.
Which of the following correctly explains the sticky-wage effect?
As wages are sticky in the short-run due to labor contracts, any increase in price level reduces the real wage,
which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run.
O As wages are sticky in the long-run due to labor contracts, any decrease in price level reduces the real wage,
which in turn, reduces the cost of production for the firms and they decrease their supply in the short-run.
As wages are sticky in the long-run due to labor contracts, any decrease in price level increases the real
wage, which in turn, reduces the cost of production for the firms and they decrease their demand in the
short-run.
O As wages are sticky in the short-run due to labor contracts, any increase in price level reduces the real wage,
which in turn, reduces the cost of production for the firms and they increase their supply in the short-run.
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