Which of these is an advantage of long-term contracts in resource markets?
A)Long-term contracts decrease the duration of recessionary gaps.
B)Long-term contracts reduce unemployment below its natural rate.
C)Long-term contracts help avoid recession in an economy.
D)Long-term contracts increase the flexibility of nominal wages.
E)Long-term contracts reduce the average cost of negotiation.

Question

Quizplus · Accepted Answer

Long-term contracts can reduce the average cost of negotiation by spreading these costs over a longer period and reducing the frequency of renegotiations. This can lead to savings for both parties involved.

Which of These Is an Advantage of Long-Term Contracts in Resource