Sticky wages cause the:
A) short-run aggregate supply curve to slope upward.
B) short-run aggregate supply curve to slope downward.
C) long-run aggregate supply curve to slope upward.
D) long-run aggregate supply curve to slope downward.

Question

Quizplus · Accepted Answer

Sticky wages refer to the idea that wages don't adjust quickly to changes in the market. In the short run, this means that when the price level decreases, wages remain sticky and firms have less incentive to produce more output. As a result, the short-run aggregate supply curve slopes upward, meaning that as the price level increases, firms are willing to produce more output due to higher profit margins.

Sticky Wages Cause The