wage contracts, efficiency wages, and the minimum wage are explanations for why:

Question

wage contracts, efficiency wages, and the minimum wage are explanations for why: A. Competition results in price wars B. Wages tend to be inflexible downward C. The aggregate demand curve slopes downward D. There is little support for the existence of a real-balance effect wage contracts, efficiency wages, and the minimum wage are explanations for why: A. Competition results in price wars B. Wages tend to be inflexible downward C. The aggregate demand curve slopes downward D. There is little support for the existence of a real-balance effect wage contracts, efficiency wages, and the minimum wage are explanations for why: A. Competition results in price wars B. Wages tend to be inflexible downward C. The aggregate demand curve slopes downward D. There is little support for the existence of a real-balance effect

Explanation / Answer

Wage contracts, efficiency wages, and the minimum wage are example of fixation of wages at particular level.

This fixation of wages at a particular level creates stickiness with respect to wages.

This results in lack of downward movement in wage rate in case of economic downturn.

So,

It can be stated that wage contracts, efficiency wages, and the minimum wage are explanations that indicates that wages tend to be inflexible downward.

Hence, the correct answer is the option (B).

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