Price Factor: 1. The Sticky-Wage Theory: An unexpectedly low price level raises the real wage, which cause firms to hire fewer workers and produce a small quantity of good and services.
2. The Sticky-Price Theory: An unexpectedly low price level leaves some firms with higher-than-desired prices, which depresses their sales and leads them to cut back production.
3. The Misperceptions Theory. An unexpectedly low price level leads some suppliers to think their relative prices have fallen, which induces a fall in production.