The Sticky-Wage Theory of the Short-Run Aggregate Supply Curve Says

question 77

Multiple Choice

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

• A)production is more profitable and employment rises.
• B)production is more profitable and employment falls.
• C)production is less profitable and employment rises.
• D)production is less profitable and employment falls.

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Definitions:

Activity Index

A measure used to estimate the amount of activity, effort, or work involved in a process or project.

Variable

An element or factor that can change or vary, often used in mathematical modeling or statistical analysis to represent changeable components.

Cost Behavior

The study of how the costs of a business change in relation to changes in its activity levels or volume.

Cost Behavior Analysis

The study of how costs change in relation to changes in a firm’s level of activity.