If the overall price level decreases but fixed nominal wage agreements cause the real wage to increase, leading firms to reduce their output, which theory does this illustrate?

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sticky-wage theory explaining the short-run aggregate supply curveclassical dichotomy theory related to the short-run aggregate supply curvemisperceptions theory of the short-run aggregate supply curvesticky-price theory concerning the short-run aggregate supply curve

Explanation

This scenario exemplifies the sticky-wage theory of the short-run aggregate supply curve, where wages are fixed in nominal terms and do not adjust immediately to changes in the price level, causing real wages to rise and firms to cut back on production.