Which of the following is a source of wage stickiness?
I. fixed wage contracts
II. minimum wage laws
III. workers and firms want to avoid complexity of negotiating contracts frequently
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question

Which of the following is a source of wage stickiness? 
I. fixed wage contracts
II. minimum wage laws
III. workers and firms want to avoid complexity of negotiating contracts frequently
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Quizplus · Accepted Answer

All three options are sources of wage stickiness. Fixed wage contracts ensure that wages remain constant over a certain period, minimum wage laws mandate a minimum wage that must be paid to workers, and both workers and firms avoid the complexity of frequent negotiations, which leads to wages remaining sticky.

Which of the Following Is a Source of Wage Stickiness