The "efficiency wage" is one possible explanation for rigidities in the economy that lead to economic instability.

Name: The "efficiency wage" is one possible explanation for rigidities in the economy that lead to economic instability.
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Efficiency wage theory suggests that paying workers higher wages can lead to increased productivity and loyalty, but it can also result in wage rigidity, contributing to economic instability by preventing wages from adjusting to market conditions.

The "Efficiency Wage" Is One Possible Explanation for Rigidities in the Economy