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The Social Contract Explanation for the Existence of Downwardly Sticky

Question 137

Multiple Choice

The social contract explanation for the existence of downwardly sticky wages focuses on


A) employment contracts that stipulate workers' wages, usually for a period of one to three years.
B) the contention that workers in one industry may be unwilling to accept a wage cut, unless they know that workers in other industries are receiving similar cuts.
C) unspoken agreements between workers and firms that firms will not cut wages.
D) the incentive that firms have to hold wages above the market clearing rate.

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