According to Research Undertaken by Truman Bewley of Yale University

Multiple Choice

According to research undertaken by Truman Bewley of Yale University businesses are reluctant to cut wages during recessions even if they can do easily due to large scale unemployment. This reluctance to cut wages comes from upper management rather than the workers. Which of the following is not a reason for management's reluctant to cut wages?

A) Workers are used to receiving regular pay increases as a reward for good work and loyalty and so interpret a pay cut as an affront and a breach of implicit reciprocity.
B) Resistance to wage reduction stem from ideas of fairness that usually refer to some reference wage. The reference wage for pay cuts is the previous wage.
C) Pay cuts may end up costing the business more in terms of reduced morale and productivity.
D) Pay cuts are hard to implement and monitor effectively. Layoffs are a much easier way of reducing wage costs.