Question

The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if

a.the price level is higher than expected making production more profitable.
b.the price level is higher than expected making production less profitable.
c.the price level is lower than expected making production more profitable.
d.the price level is higher than expected making production less profitable.

Answer 1

a.the price level is higher than expected making production more profitable.

Step-by-step explanation:

The sticky wages shows that the output increases if the price level is higher because an increase in price level increases the profitability and the increased profitability increases output.