Nominal wages are sticky because:
A) wages are slow to rise when there are labour shortages and slow to fall even when the level of unemployment is significant.
B) wages remain fixed in the long run,increasing the profitability of the firms.
C) wages are slow to fall when there are labour shortages and slow to rise even when the level of unemployment is significant.
D) in the long run all wages are adjusted for inflation.

Question

Quizplus · Accepted Answer

Nominal wages are considered sticky because they do not adjust quickly to changes in economic conditions. They are slow to rise during labor shortages due to contracts, norms, and regulations, and slow to fall even with high unemployment due to factors like minimum wage laws and worker morale.

Nominal Wages Are Sticky Because