According to John Maynard Keynes, prices and wages are rather inflexible in a downward direction because powerful labor unions and corporations will resist wage and price reductions during an economic slump.

Question

Quizplus · Accepted Answer

John Maynard Keynes argued that prices and wages are inflexible downwards due to resistance from labor unions and corporations, which would rather cut production or employment than reduce wages or prices during economic downturns. This concept is part of his broader theory on why economies can remain in a state of underemployment equilibrium.

According to John Maynard Keynes, Prices and Wages Are Rather