Question

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.

Answer 1

The correct answer is Option C

Step-by-step explanation:

(C) workers will strike bargains for higher wages. In response to the higher wages firms will produce less at any given price level.