Which of the following best describes how nominal wages will be affected in the long run?
A) Nominal wages and real wages tend to be equal.
B) Nominal wages are more flexible downward than upward.
C) Nominal wages are more flexible than prices.
D) Sustained and continuous unemployment suggests nominal wages do NOT fall quickly.

Question

Which of the following best describes how nominal wages will be affected in the long run?  
A) Nominal wages and real wages tend to be equal. 
B) Nominal wages are more flexible downward than upward. 
C) Nominal wages are more flexible than prices. 
D) Sustained and continuous unemployment suggests nominal wages do NOT fall quickly.

Quizplus · Accepted Answer

Nominal wages tend to be sticky downwards, meaning they do not decrease quickly in response to economic downturns or high unemployment. This stickiness can contribute to sustained unemployment, as wages do not adjust downward fast enough to match decreases in demand for labor.

Which of the Following Best Describes How Nominal Wages Will