In the sticky-wage model,if labour contracts specify that the nominal wage be partially indexed for inflation,the short-run aggregate supply schedule will be:
A) vertical.
B) steeper than it would be without indexing.
C) flatter than it would be without indexing.
D) horizontal.

Question

Quizplus · Accepted Answer

Indexing nominal wages for inflation makes wages more responsive to price level changes, leading to a steeper short-run aggregate supply curve compared to a situation without indexing.

In the Sticky-Wage Model,if Labour Contracts Specify That the Nominal