The Relative-Wage Explanation for the Existence of Downwardly Sticky Wages

question 25

Multiple Choice

The relative-wage explanation for the existence of downwardly sticky wages emphasizes

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

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Definitions:

Inventory Valuation

The process of calculating the cost assigned to inventory items to determine the cost of goods sold and the inventory asset value at the end of an accounting period.

Weighted Average

A calculation that takes into account the varying weights or significance of different items in a data set, producing a mean value.

Perpetual Inventory System

A method of inventory management that instantly logs sales or acquisitions of inventory using computerized point-of-sale systems and software for managing enterprise assets.

Inventory Valuation

The method used to calculate the cost associated with an inventory at the end of a financial period, affecting cost of goods sold and gross profit.