Sticky wages occur because:
A) employers must wait until the current contract ends to cut someone's pay.
B) unions often negotiate wages for several years in advance.
C) wages can only be changed at the end of contracts, as opposed to final good prices which can change anytime.
D) All of these are true.

Question

Quizplus · Accepted Answer

All three options described in the question can contribute to sticky wages. Employers may be contractually obligated to maintain wages for a set period of time, unions may negotiate wages for multiple years at once, and changing wages can be a more complicated and time-consuming process than changing the prices of final goods.

Sticky Wages Occur Because