When aggregate demand declines, wage rates may be inﬂexible downward, at least for a time, because of

Name: When aggregate demand declines, wage rates may be inﬂexible downward, at least for a time, because of
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Labor contracts can prevent wage rates from immediately adjusting downward in response to a decline in aggregate demand. These contracts often specify fixed wages for a certain period, making it difficult for employers to lower wages in response to changing economic conditions.

When Aggregate Demand Declines, Wage Rates May Be Inﬂexible Downward