The Keynesian Sticky-Wage Theory States That in the Short Run

question 54

Multiple Choice

The Keynesian sticky-wage theory states that in the short run:

• A)wages do not adjust to changes in prices; therefore, real wages change and suppliers adjust their output levels
• B)wages adjust to changes in prices; therefore, real wages are unchanged and suppliers do not adjust their output levels
• C)wages adjust instantaneously to changes in prices
• D)none of the above is an implication of the Keynesian sticky-wage theory

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Definitions:

Structure Versus Behavior

A distinction in competition policy and economic regulation focusing on the organization and arrangements of firms (structure) versus their actual conduct (behavior) in the market.

Rule Of Reason

The principle that not all actions deemed as restrictive of trade are illegal, depending on whether they are unreasonable restraints.

Vertical Merger

A business combination of companies that operate along the same supply chain but at different stages of production.

Horizontal Merger

The combination of two or more firms competing in the same industry and at the same stage of production, aimed at increasing market share.