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.