According to Keynes, wages are inflexible because
A) of the minimum wage set by government.
B) of long-term contracts.
C) workers do not behave in their own self-interest.
D) workers are not rational.

Question

Quizplus · Accepted Answer

Keynes believed that wages are inflexible due to long-term contracts between employers and employees, which make it difficult to adjust wages quickly in response to changes in the economy. He also believed that workers may resist nominal wage cuts even when it is in their best interest to do so, due to factors such as social norms and the fear of reducing their standard of living. However, neither A, C, nor D are accurate explanations for Keynes' view on wage inflexibility.

According to Keynes, Wages Are Inflexible Because