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Macroeconomics: Sticky Wage Model
This model of aggregate demands explains that the short-term aggregate supply curve slopes upward because in the short-run nominal wages are fixed and sticky.
In this model, firms move along a stationary labor demand curve.
Therefore, if the price level unexpectedly rises, the real wage falls below its expected level and firms hire more workers and increase production.
When GDP increases and there are no supply shocks, real wages fall.
According to Macroeconomics by Gregory Mankiw
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