When,because of hiring and firing costs,firms retain workers in a recession that they would otherwise lay off,there is said to be
A)labour hoarding.
B)a decline in capacity utilization.
C)voluntary unemployment.
D)involuntary unemployment.

Question

Quizplus · Accepted Answer

Labour hoarding refers to the practice of firms retaining workers in a recession, rather than laying them off, in order to avoid the costs of hiring and firing. This can lead to lower productivity and reduced profits in the short run, but may help to maintain valuable skills and experience within the firm, which could be useful when the economy recovers.

When,because of Hiring and Firing Costs,firms Retain Workers in a Recession