Suppose Nominal Wages Are Sticky in the Downward Direction

question 153

Multiple Choice

Suppose nominal wages are sticky in the downward direction.If no government intervention occurs, how may unemployment be affected in the long run?  

• A) Unemployment may persist for long periods of time. 
• B) Shortages of labour may persist for long periods of time. 
• C) Increases in real wages will occur too quickly to affect unemployment. 
• D) Nominal wage increases will help reduce unemployment.

---

Definitions:

Productivity Suffers

A situation where the efficiency or output of work decreases due to various factors.

Emotional Interference

The impact of one's emotions on their cognitive processes, potentially hindering decision-making or problem-solving abilities.

Selective Perception

The process by which individuals perceive what they want in media messages while ignoring opposing viewpoints.

Selective Memory

A cognitive process where a person remembers some information while forgetting other info, often influenced by emotional factors.