Which of these is an advantage of long-term contracts in resource markets?

A) Long-term contracts decrease the duration of recessionary gaps.
B) Long-term contracts reduce unemployment below its natural rate.
C) Long-term contracts help avoid recession in an economy.
D) Long-term contracts increase the flexibility of nominal wages.
E) Long-term contracts reduce the average cost of negotiation.

Long-Term Contracts

Agreements that extend over a significant period of time, often involving commitments to buy or sell goods or services or to provide employment.

Recessionary Gaps

Situations where an economy's actual output is less than its potential output, often characterized by unemployment and underutilized resources.

Natural Rate

The natural rate often refers to the unemployment rate when the economy is at full capacity, balancing the number of job seekers with job vacancies without accelerating inflation.