If output is above its natural rate,then according to sticky-wage theory
A)workers and firms will strike bargains for lower wages.In response to the lower wages firms will produce less at any given price level.
B)workers and firms will strike bargains for lower wages.In response to the lower wages firms will produce more at any given price level.
C)workers will strike bargains for higher wages.In response to the higher wages firms will produce less at any given price level.
D)workers and firms will strike bargains for higher wages.In response to the higher wages firms will produce more at any given price level.

Question

Quizplus · Accepted Answer

According to the sticky-wage theory, if output is above its natural rate, workers will demand higher wages. As wages increase, firms face higher production costs and thus produce less at any given price level.

If Output Is Above Its Natural Rate,then According to Sticky-Wage