Final answer:
Keynes believed wage rates are downwardly inflexible due to resistance from employees and labor unions, and because wage cuts can harm worker morale and productivity. Economic laws such as minimum wage and union contracts also contribute, but affect only a minor portion of the workforce.
Step-by-step explanation:
John Maynard Keynes believed that wage rates may be inflexible in a downward direction, and a possible reason for this inflexibility is that employees and labor unions resist wage cuts. Keynes' coordination argument suggests a lack of mechanism for implementing coordinated wage reductions across the market in bad economic times.
Moreover, businesses may avoid cutting wages because it can negatively impact worker morale and productivity. While economic laws and institutions provide some reasons for sticky wages, such as legal restrictions on minimum wages and union contracts, these don't fully explain the phenomenon in the U.S. economy as they affect a relatively small percentage of workers.