Stickiness of wages
A) is unrelated to stickiness of prices.
B) lessens the stickiness of prices.
C) reinforces stickiness of prices.
D) may or may not reinforce stickiness of prices.

Question

Quizplus · Accepted Answer

Stickiness of wages refers to the concept that wages often do not adjust immediately to changes in economic conditions, such as changes in supply and demand for labor. This can reinforce the stickiness of prices, as firms may be reluctant to lower prices if they cannot reduce their labor costs accordingly. This can lead to a situation known as "sticky prices and wages," where both prices and wages are slow to adjust, potentially resulting in economic inefficiencies.

Stickiness of Wages