We Don't Typically See Wages Fall in Response to an Economic

question 76

Multiple Choice

We don't typically see wages fall in response to an economic downturn because:

• A) labor supply adjusts so that the market stays at the original equilibrium wage level.
• B) there is often little change in the labor market in response to economic conditions.
• C) they are "sticky" and are slow to respond to shifts in the economy.
• D) the government sets tight regulations on how firms compensate their employees.

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Definitions:

Effective-interest

Another term for the effective interest method, emphasizing the allocation of interest over the life of financial instruments like bonds.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, paid as interest on debt such as loans, bonds, or lines of credit.

Convertible Bonds

Bonds that may be converted to other securities of the issuer (usually common stock).

Bondholder

An individual or entity that owns a bond issued by a borrower, entitling them to receive interest payments and the return of principal.