According to Keynes, wages are inflexible because
A)of the minimum wage set by government.
B)of unions and long-term contracts.
C)workers do not behave in their own self-interest.
D)the economy is never in the long run.

Question

Quizplus · Accepted Answer

Keynes believed that wages were inflexible due to the power of unions and long-term contracts. He argued that workers would resist wage cuts even if it was in their own self-interest, and that this would lead to unemployment and economic downturns. He also acknowledged the role of government intervention in setting minimum wages, but believed that this was not the primary reason for wage inflexibility.

According to Keynes, Wages Are Inflexible Because