According to Keynes, the "stickiness" of wage rates could best be explained by
A) minimum wage laws.
B) unions and long-term labor contracts.
C) short-term labor contracts.
D) government interference.

Question

Quizplus · Accepted Answer

Keynes believed that wage stickiness resulted from the power of unions and the prevalence of long-term labor contracts, which prevented wages from easily adjusting downward to reach a new equilibrium in the face of reduced demand for labor.

According to Keynes, the "Stickiness" of Wage Rates Could Best