Wages are sticky when: A. All of the above are true. B. They are not changed every single time prices change. C. Labor unions have set wages for a certain period of time. D. They are set according to inflation expectations that end up differing from actual inflation rates.

Question

Jaiden Frey

Business

14 April, 14:32

Wages are sticky when: A. All of the above are true. B. They are not changed every single time prices change. C. Labor unions have set wages for a certain period of time. D. They are set according to inflation expectations that end up differing from actual inflation rates.

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Answers (1)

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Goblin · Answer 1

B

Explanation:

Wages are sticky when earnings do not adjust quickly to changes in the market conditions. In some other situations, the rate of can be too slow compared to the rate of changes in the market. That means that every single time that market prices change, wages remain the same or just have a marginal change.

Factors that trigger sticky wages are unemployment, and roles of the labor union.

Sticky wages can be useful in the sense that it can explain why market might not reach equilibrium in the short run or even in the long run.