Nominal wages are sticky because:
A) wages are slow to rise when there are labor shortages and slow to fall even when the level of unemployment is significant.
B) wages remain fixed in the long run, increasing the profitability of the firms.
C) wages are slow to fall when there are labor shortages and slow to rise even when the level of unemployment is significant.
D) in the long run all wages are adjusted for inflation.

Question

Quizplus · Accepted Answer

Nominal wages are considered sticky because they do not adjust quickly to changes in the labor market, such as shortages or surpluses of labor. This stickiness is due to factors like long-term contracts, minimum wage laws, and the reluctance of employers to reduce wages.

Nominal Wages Are Sticky Because