Keynesians explain the procyclical behavior of average labor productivity by introducing the concept of
A)menu costs.
B)sticky prices.
C)labor hoarding.
D)sticky wages.

Question

Quizplus · Accepted Answer

Keynesians argue that firms tend to hoard labor during recessions, due to the high cost of layoffs and the expectation of future recovery. This results in a decrease in labor productivity during recessions, which is consistent with the procyclical movement of labor productivity over the business cycle.

Keynesians Explain the Procyclical Behavior of Average Labor Productivity by Introducing