Which of the following statements is true regarding wages?

Wages can be sticky, meaning they do not adjust immediately or easily to changes in the economic environment, such as shifts in demand for labor or inflation. This stickiness can be attributed to various factors, including contracts, minimum wage laws, and the reluctance of employers to reduce wages for existing employees due to potential negative impacts on morale and productivity. As a result, when economic conditions change, there can be a lag in how quickly wages respond, leading to situations where wages may stay constant for a period even if the labor market indicates a need for adjustment. This concept helps explain unemployment and other labor market phenomena.

The other statements can lead to misunderstandings about the nature of wages in an economy. While wages can be flexible in certain scenarios, they are not always so, evidenced by the aforementioned stickiness. Not all wages increase with inflation; real wages can be affected by various factors, including productivity and labor supply, which can cause some wages to stagnate or even decline in real terms. Lastly, wages do not adjust immediately to market changes due to factors such as contractual obligations and the aforementioned reluctance of employers to make rapid changes. Understanding the stickiness of wages is crucial in macroeconomic analysis, as it has implications for unemployment, inflation,