The paper examines the effect of moneywage cut on employment - an issue on which traditional macrotheory and recent microtheory derive opposite conclusions. We show that if prices are flexible the effect of money-wage cut on employment is uncertain, and its direction depends on the nature of the house-holds' utility functions. Since this opposes the established microtheoretic result that the cut in such situations is always expansionary, we examine the standard demonstrations showing that they implicitly restrict the utility functions. This brings microtheoretic result on wage-cut in line with the standard macro-economic result that money-wage cut is generally ambiguous in effect, unless additional restrictions are imposed on the aggregate consumption function.