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castortr0y [4]
3 years ago
7

Complete the statements about the following three theories for the upward slope of the short-run aggregate-supply curve.

Business
1 answer:
Strike441 [17]3 years ago
6 0

Answer:

high,high

not all prices adjust quickly

below

Explanation:

According to the sticky-wage theory, the economy is in a recession because the price level has declined so that real wages are too high, thus labor demand is too high.

Real wages decline as nominal wages are adjusted. As a result, the economy returns to full employment

According to the sticky-price theory, the economy is in a recession because not all prices adjust quickly.

As people observe the lower price level, the economy returns to the long-run aggregate supply curve.

According to the misperceptions theory, the economy is in a recession when the price level is below what was expected.

As people observe the lower price level, their expectations adjust.

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