Which of the following contributes to the downward inflexibility of wages, according to mainstream economists?
A) Efficiency wages
B) A monetary rule
C) Price-level surprises
D) Coordination failures

Question

Quizplus · Accepted Answer

Mainstream economists generally argue that efficiency wages, or wages that are set above the equilibrium level to motivate workers and reduce turnover, contribute to downward inflexibility of wages. This is because employers are often reluctant to reduce wages, as this can lower worker morale and productivity, and potentially lead to increased turnover.

Which of the Following Contributes to the Downward Inflexibility of Wages