Consider the three theories of the upward slope of the short-run aggregate-supply curve. According to the sticky-wage theory, the economy recovers from a recession as nominal wages are adjusted so that real wages . True or False: According to the sticky-price theory, the economy is in a recession because people expect prices to rise quickly in a recession. True False True or False: According to the misperceptions theory, the economy is in a recession when the price level is above what was expected. True False

Consider the three theories of the upward slope of the short-run aggregate-supply curve. According to the sticky-wage theory, the economy recovers from a recession as nominal wages are adjusted so that real wages . True or False: According to the sticky-price theory, the economy is in a recession because people expect prices to rise quickly in a recession. True False True or False: According to the misperceptions theory, the economy is in a recession when the price level is above what was expected. True False

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter16: Monetary Policy

Section16.A: Policy Disputes Using The Self Correcting Aggregate Demand And Supply Model

Problem 9SQ

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Question

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Consider the three theories of the upward slope of the short-run aggregate-supply curve.

According to the sticky-wage theory, the economy recovers from a recession as nominal wages are adjusted so that real wages .

True or False: According to the sticky-price theory, the economy is in a recession because people expect prices to rise quickly in a recession.

True

False

True or False: According to the misperceptions theory, the economy is in a recession when the price level is above what was expected.

True

False

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Please highlight the correct answer for each of the two questions and if you can please explain why it is correct.
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