According to the Sticky-Wage Theory, Which Statement Is Consistent with an Unexpected

question 138

Multiple Choice

According to the sticky-wage theory, which statement is consistent with an unexpected fall in the price level?

• A) The real wage rises and employment rises.
• B) The real wage rises and employment falls.
• C) The real wage falls and employment rises.
• D) The real wage falls and employment falls.

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Definitions:

Disequilibrium Principle

The state of imbalance or disequilibrium in an eco-system or in a market, which can lead to significant shifts or adjustments within that system.

Classical Conditioning

A learning process that involves creating associations between a naturally occurring stimulus and a previously neutral stimulus.

Law of Effect

A psychological principle suggesting that behaviors followed by positive outcomes are likely to be repeated, while those with negative outcomes are not.

Spontaneous Recovery

The reappearance of a previously extinguished conditioned response after a pause, without the need for further conditioning.