Question

According to the sticky-wage theory of aggregate supply, nominal wages at the initial equilibrium are ____________ nominal wages at the short-run equilibrium resulting from the increase in the money supply, and ______________ nominal wages at the long-run equilibrium.

Answer 1

Answer: According to the sticky-wage theory of aggregate supply, nominal wages at the initial equilibrium are EQUAL TO nominal wages at the short-run equilibrium resulting from the increase in the money supply, and LESS THAN nominal wages at the long-run equilibrium.