Downward wage rigidity is likely to ________ in an economy.

Question

Quizplus · Accepted Answer

Downward wage rigidity refers to the resistance of employers to reduce wages in response to a decrease in demand for labor. This can lead to higher unemployment as firms may be unwilling to hire new workers or may need to lay off current workers in order to reduce labor costs. Therefore, the correct choice is A, which indicates that downward wage rigidity is likely to increase unemployment.

Downward Wage Rigidity Is Likely to ________ in an Economy