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When aggregate demand declines, efficiency wages might contribute to downward wage inflexibility, at least for a time, because wage cuts can O increase employment and GDP. O cause aggregate supply to fall. O reduce productivity, raise per-unit labor costs, and be self-defeating. O cause people to quit their jobs.

When aggregate demand declines, efficiency wages might contribute to downward wage inflexibility, at least for a time, because wage cuts can O increase employment and GDP. O cause aggregate supply to fall. O reduce productivity, raise per-unit labor costs, and be self-defeating. O cause people to quit their jobs.

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter23: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 4CQQ
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When aggregate demand declines, efficiency wages might contribute to downward wage inflexibility, at least for a time, because wage cuts can O increase employment and GDP. O cause aggregate supply to fall. O reduce productivity, raise per-unit labor costs, and be self-defeating. O cause people to quit their jobs.
Transcribed Image Text:When aggregate demand declines, efficiency wages might contribute to downward wage inflexibility, at least for a time, because wage cuts can O increase employment and GDP. O cause aggregate supply to fall. O reduce productivity, raise per-unit labor costs, and be self-defeating. O cause people to quit their jobs.
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