Long-term contracts are desirable for both firms and workers for each of the following reasons EXCEPT one.Which of the following does NOT explain the desirability of long-term contracts?
A)Wage negotiations are costly and time consuming on both sides.
B)Contracts insulate workers from changing economic conditions such as decreases in aggregate demand.
C)The incidence of strikes decreases because the contracts are binding for three years.
D)Contracts reduce uncertainty.

Question

Quizplus · Accepted Answer

Long-term contracts do not necessarily insulate workers from changing economic conditions, as external factors such as technological change or global competition may still affect the demand for labor.

Long-Term Contracts Are Desirable for Both Firms and Workers for Each