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

question 77

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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