If Nominal Wages Are Sticky in the Downward Direction

question 172

Multiple Choice

If nominal wages are sticky in the downward direction,

• A)unemployment may persist for long periods of time
• B)shortages of labor may persist for long periods of time
• C)increases in real wages will happen too quickly to affect unemployment
• D)nominal wage increases will reduce the price level
• E)decreases in nominal wages will increase the inflation rate

---

Definitions:

Consumer Angst

A state of anxiety or aversion experienced by consumers, often due to negative experiences or perceptions related to purchasing and using products or services.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds contradictory beliefs, ideas, or values, leading to an internal conflict.

Purchase Anxiety

The apprehension or doubt a consumer may feel before making a purchase decision, often due to fear of making the wrong choice.

Consumer Cynicism

A sentiment or attitude of distrust towards marketing practices, where consumers doubt the honesty or integrity of advertisements and promotions.