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

Question

Quizplus · Accepted Answer

Sticky wages refer to the idea that wages do not adjust quickly to changes in market conditions. This causes firms to face higher input costs than they would if wages were more flexible. As a result, firms are less willing to produce output at lower prices, which leads to a higher marginal cost of production and a higher price level. This, in turn, leads to an upward sloping short-run aggregate supply curve.

Sticky Wages Cause