According to the Sticky Wage Theory, Which of the Following

question 161

Multiple Choice

According to the sticky wage theory, which of the following 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:

Purely Competitive

Another term for pure competition, it refers to a theoretical market structure with a large number of buyers and sellers, homogeneous products, and free entry and exit from the market.

Output Level

The total amount of goods or services produced by a business or economy within a specific period.

Economic Loss

A situation where total cost exceeds total revenue, resulting in a negative profit for a business.

Average Variable Cost

The total variable costs divided by the quantity of output, indicating the variable cost per unit of output.