What do economists mean by the term "sticky wage?" Select one:
a. It refers to the reluctance by employers to increase nominal wages during an inflationary period.
b. It refers to a wage that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus in the labor market.
c. It refers to a breakdown in wage negotiations between employers and employee unions.
d. It refers to a union negotiated wage.
Wages and Labor:
Wages are the price that firms pay household for their time. Households use wages to buy goods from firms. Specialization and money allow for individuals to supply labor in one market and buy goods in another.
Answer and Explanation: 1
Sticky wages refer to the observed phenomenon that wages are relatively stable in the short-run even if there are changes in the...
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fromChapter 7 / Lesson 9
Understand what sticky wages and sticky prices are. Comprehend wage rigidity. Discover why sticky wages and prices are important in Keynesian decision-making.