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

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Definitions:

Tertiary Sector

A segment of the economy focused on providing services rather than producing goods, including sectors like retail, entertainment, and financial services.

Self-employed

A status referring to individuals who work for themselves, either by owning a business or by offering their services independently.

Secondary Labour Market

Jobs that are insecure and temporary, offer minimal pay, and provide few opportunities to advance.

Primary Labour Market

Jobs that provide stable and comfortable salaries, potential for growth and promotion, and fringe benefits, but also require postsecondary training or education.