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:

Biological Roots

The genetic, neurochemical, and physiological bases of behavior and mental processes, emphasizing the role of nature in psychology.

What We Know

A phrase indicating the extent of knowledge and understanding that has been established on a particular subject up to the current time.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Social Status

The position or rank of a person or group within the social hierarchy.