Which of the following is generally true of nominal wages?
A)In the long run,nominal wages tend to equal real wages.
B)Nominal wages are more flexible downward than upward.
C)Nominal wages are more flexible than prices.
D)Nominal wages tend to adjust slowly in the downward direction.
E)Nominal wages do not rise during labor shortages.

Question

Quizplus · Accepted Answer

Nominal wages tend to adjust slowly in the downward direction, meaning that they are sticky and resistant to decreasing even in times of economic downturns or labor market slack. This is because of factors such as minimum wage laws, union bargaining power, and employee resistance to wage cuts.

Which of the Following Is Generally True of Nominal Wages