The Social Contract Explanation for the Existence of Downwardly Sticky

question 79

Multiple Choice

The social contract explanation for the existence of downwardly sticky wages focuses on

• A) employment contracts that stipulate workers' wages, usually for a period of one to three years.
• B) the contention that workers in one industry may be unwilling to accept a wage cut, unless they know that workers in other industries are receiving similar cuts.
• C) unspoken agreements between workers and firms that firms will not cut wages.
• D) the incentive that firms have to hold wages above the market clearing rate.

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Definitions:

Current Yields

The annual income (interest or dividends) from an investment divided by the current price of the security, expressed as a percentage.

Par Value

The nominal or face value of a bond, share of stock, or other financial instruments, as stated by the issuing company.

Yield To Maturity

The total return anticipated on a bond if the bond is held until the date of its maturity, considering all payments from the time of purchase to maturity.

Term To Maturity

The remaining time until a debt security is due to be repaid, at which point the principal (or face value) is paid to the bondholders.