Economics · Macroeconomics
In Friedman's theory, given money wages, the short-run aggregate supply curve slopes upward because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1workers cannot predict price level changes immediately, leading to short-run misperceptions of real wages.✓
- 2workers correctly anticipate price changes and immediately adjust their labour supply accordingly.
- 3workers in the labour market fail to predict changes in the average price level even with a lag.
- 4workers in the labour market correctly predict changes in the average price level instantaneously.
Correct answer
workers cannot predict price level changes immediately, leading to short-run misperceptions of real wages.
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