When economic conditions change, all firms can adjust wages to those conditions.

Question

Quizplus · Accepted Answer

Although firms can adjust wages to some extent, they may face constraints such as labor regulations, contractual agreements, and resistance from employees. Additionally, some industries or regions may have wage rigidity due to factors such as high unionization rates or prevailing wage norms. Therefore, not all firms can easily and quickly adjust wages to changes in economic conditions.

When Economic Conditions Change, All Firms Can Adjust Wages to Those