Question

QUESTION 64

1. The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

   	a.	production is less profitable and employment falls.
   	b.	production is less profitable and employment rises.
   	c.	production is more profitable and employment rises.
   	d.	production is more profitable and employment falls.

1 points   

QUESTION 65

1. Other things the same, if technology increases, then in the long run

   	a.	both output and prices are lower.
   	b.	both output and prices are higher.
   	c.	output is lower and prices are higher.
   	d.	output is higher and prices are lower.

Answer 1

64. Option C.

• According to the sticky wage theory of the short run aggregate supply curve, when the price level rises more than expected, the firms will earn more profits.
• The firms will be able to increase the level of production.
• This will encourage them to employ more worker's and hence the employment rises within the economy.

65. Option D.

• In the long run all the factors are variable in nature.
• When technology increases in the long run, firms will be able to increase their production and also the number of units produced.
• With higher level of output produced, they will achieve economies of scale and hence they will charge lower prices for their goods and services.