________ is one source of involuntary unemployment during recessions.
A) A lower corporate tax rate
B) A higher income tax rate
C) Flexibility of wages
D) Downward rigidity of wages

Question

Quizplus · Accepted Answer

Downward rigidity of wages refers to the tendency of wages to remain at a certain level even in the face of declining demand for labor. During recessions, businesses may not be able to reduce wages to match the reduced demand for their goods or services, leading to involuntary unemployment. Lowering the corporate tax rate or raising the income tax rate would not directly impact involuntary unemployment. Flexibility of wages would help to mitigate involuntary unemployment during recessions, but the question specifically asks for a source of involuntary unemployment.

________ Is One Source of Involuntary Unemployment During Recessions