If labor contracts prevent wage flexibility, the aggregate supply curve will be
A) vertical.
B) horizontal.
C) negatively sloped.
D) positively sloped.

Name: If labor contracts prevent wage flexibility, the aggregate supply curve will be A) vertical. B) horizontal. C) negatively sloped. D) positively sloped.
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Question

Quizplus · Accepted Answer

When labor contracts prevent wage flexibility, wages are sticky, leading to a positively sloped aggregate supply curve in the short run, as output can increase with higher prices.

If Labor Contracts Prevent Wage Flexibility, the Aggregate Supply Curve