One complication that tends to prolong recessionary gaps is that wages
A)are fixed by unions, which represent nearly all workers in the United States.
B)tend to rise rapidly.
C)rarely fall.
D)tend to move in the opposite direction from prices.

Question

Quizplus · Accepted Answer

Wages rarely fall during a recession, which can prolong the recessionary gap. This is because workers are typically resistant to wage cuts, and employers may be hesitant to cut wages as it can lead to worker dissatisfaction and decreased productivity. Consequently, firms may instead choose to reduce their workforce or cut hours, which can further exacerbate the recessionary gap.

One Complication That Tends to Prolong Recessionary Gaps Is That