Long-Term Contracts Are Desirable for Both Firms and Workers for Each

question 44

Multiple Choice

Long-term contracts are desirable for both firms and workers for each of the following reasons EXCEPT one.Which of the following does NOT explain the desirability of long-term contracts?

• A)Wage negotiations are costly and time consuming on both sides.
• B)Contracts insulate workers from changing economic conditions such as decreases in aggregate demand.
• C)The incidence of strikes decreases because the contracts are binding for three years.
• D)Contracts reduce uncertainty.

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Definitions:

Money Supply

The aggregate quantity of all forms of money, including cash and bank deposits, circulating within an economy.

Interest Rates

The cost of borrowing money or the return on investment, typically expressed as a percentage.

Aggregate Demand

The full scope of demand for products and services in an economy, gauged at a specified price level across a specific duration.

Investment

The act of allocating resources, usually capital, to generate a return, which can include ventures in stocks, bonds, or physical assets like real estate.