Sticky wages occur because:
A) the government intervenes in the labor market.
B) the market for labor is competitive.
C) some wages can only be changed at the end of contracts, as opposed to final good prices, which can change anytime.
D) All of these are true.

Question

Quizplus · Accepted Answer

Sticky wages occur because some wages can only be changed at the end of contracts, as opposed to final good prices, which can change anytime. This creates a delay in the adjustment of wages, leading to sticky wages. Government intervention or a competitive labor market are not necessarily the causes of sticky wages.

Sticky Wages Occur Because