In Reality, Why Don't Wages Fall During Recessions

question 122

Multiple Choice

In reality, why don't wages fall during recessions?

• A) Wages are sticky downwards.
• B) Worker morale.
• C) Workers need to pay their bills.
• D) The federal government says so.
• E) Some workers will be laid off so that wages do not have to decrease.

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Definitions:

Direct Costs

Costs that can be directly traced to producing specific goods or services, such as direct labor and direct materials.

Direct Manufacturing Cost

Expenses directly tied to the production of specific goods, including materials and labor.

Relevant Range

The range of activity within which the assumptions about fixed costs and variable unit costs are valid for purposes of budgeting and decision-making.

Direct Costs

Expenses that can be directly traced to the production of specific goods or services, such as raw materials and labor.