In Which of the Following Situations Are Wages the Least

question 72

Multiple Choice

In which of the following situations are wages the least likely to be sticky?

• A) Unionized workers are in the second year of a three-year labour contract.
• B) A firm that pays efficiency wages to its employees is experiencing an economic recession.
• C) A firm has an implicit contract with its employees regarding wages during recessions and expansions.
• D) A firm hires hourly workers based on changes in the supply and demand for its products.

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Definitions:

Bond Yield

The return an investor realizes on a bond, calculated as the annual interest payment divided by the bond's current market price.

Face Value

The nominal value printed on a bond, currency, ticket, or other financial instrument, representing its legal value rather than market value.

Market Price

The present rate at which a service or asset is available for purchase or sale.

Investment Option

A financial vehicle or asset that individuals can allocate capital towards with the expectation of a future return.