If the Wage Rate in the Labor Market Is $12

question 212

Multiple Choice

If the wage rate in the labor market is $12 and more previously unemployed people exited the labor force, which of the following statements is correct?

• A) If wages are flexible, then wages will decrease.
• B) If wages are sticky, the unemployment rate decreases.
• C) If wages are sticky, the unemployment rate stays the same.
• D) If wages are flexible, the unemployment rate increases.

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Definitions:

Covariation Model

Kelley’s theory of causal attribution – people assign the cause of behaviour to the factor that covaries most closely with the behaviour.

Emotional Lability

The propensity for rapid, often unpredictable changes in emotion.

Correspondent Inference

A theory suggesting that people infer the motives and dispositions of others from observable behaviors, especially if the behaviors are unexpected.

Causal Inference

The process of determining the cause-and-effect relationship between variables, typically assessed through controlled experiments or observational studies.