Sticky nominal wages can lead to:
A) involuntary unemployment
B) $L ^ { S }

Name: Sticky nominal wages can lead to: A) involuntary unemployment B) $L ^ { S } < L ^ { D }$ C) a labor surplus D) falling real wages E) higher levels of TFP
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Question

Sticky nominal wages can lead to:
A) involuntary unemployment
B) $L ^ { S } < L ^ { D }$
C) a labor surplus
D) falling real wages
E) higher levels of TFP

Quizplus · Accepted Answer

Sticky nominal wages can lead to involuntary unemployment because wages do not adjust quickly to changes in labor demand, causing a mismatch between the number of jobs available and the number of workers seeking employment.

Sticky Nominal Wages Can Lead To: A) Involuntary Unemployment B) LS<LDL ^ { S } < L ^ { D }LS<LD

Sticky Nominal Wages Can Lead To:
A) Involuntary Unemployment
B) $L ^ { S } < L ^ { D }$