Wages tend to be sticky
A)because of contracts, social norms, and notions of fairness.
B)because of contracts, but not social norms or notions of fairness.
C)because of social norms and notions of fairness, but not contracts.
D)but not because of social norms, notions of fairness or contracts.

Question

Quizplus · Accepted Answer

Wages tend to be sticky because of contracts, social norms, and notions of fairness. Contracts often specify a fixed wage rate for a certain period, which makes it difficult for employers to adjust wages in response to changes in the economy. Social norms and notions of fairness also play a role, as workers may feel that it is unfair to have their wages reduced, even if the company is facing financial difficulties. This may lead to resistance from workers and unions, making it difficult for employers to adjust wages downwards.

Wages Tend to Be Sticky