Which of the Following Correctly Explains Why Real Wages May

question 43

Multiple Choice

Which of the following correctly explains why real wages may vary in the short run?

• A) Workers usually prefer inflexible nominal wage agreements.
• B) Since wage bargaining is costless, firms and workers negotiate new wages frequently.
• C) The level of inflation in most economies is stable.
• D) In most industries, nominal wage adjustment is instantaneously linked to inflation.

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Definitions:

Investment Projects

Initiatives undertaken by businesses or individuals involving the allocation of resources with the expectation of future returns.

Cash Outflows

Money spent or costs incurred by a business or individual, resulting in a decrease in cash reserves.

Straight-Line Depreciation

A manner for spreading out the cost of a tangible asset across its useful life in regular yearly installments.

Income Taxes

Income taxes are taxes imposed by governments on the income generated by businesses and individuals within their jurisdiction.