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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
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 rise or decline .
According to the sticky-price theory, the economy is in a recession because not all prices adjust quickly or people expect prices to rise quickly in a recession .
According to the misperceptions theory, the economy is in a recession when the price level is above or beyond what was expected.
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