Contrast the sticky wage theory with the sticky price (menu cost) theory in a situation where the overall price level increases.
a. Under the sticky wage theory, producers expand production and sales because of higher profit margins, whereas under the sticky price theory, producers find their sales increasing because their prices are relatively lower.
b. Under the sticky wage theory, producers find their sales increasing because their prices are relatively lower, whereas under the sticky price theory, producers expand production and sales because of lower profit margins.
c. Under the sticky wage theory, producers reduce production and sales because of higher profit margins, whereas under the sticky price theory, producers find their sales decreasing because their prices are relatively lower.
d. Under the sticky wage theory, producers find their sales decreasing because their prices are relatively lower, whereas under the sticky price theory, producers decrease production and sales because of higher profit margins.
a. Under the sticky wage theory, producers expand production and sales because of higher profit margins, whereas under the sticky price theory, producers find their sales increasing because their prices are relatively lower.
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In the federal penitentiary at Lompoc, California, inmates used packages of mackerel to buy items such as haircuts at the prison barber shop and laundry services. What function do these packages of mackerel serve?
A) They functioned as money. B) They served as a corruption deterrent. C) They enabled prison officers to monitor illegal money flows. D) They forced prisoners to engage in barter.
If a bank needs to raise the amount of capital relative to assets, a bank manager might choose to
A) buy back bank stock. B) pay higher dividends. C) shrink the size of the bank. D) sell securities the bank owns and put the funds into the reserve account.