When the Labor Market Is in Equilibrium

question 109

Multiple Choice

When the labor market is in equilibrium,

• A)there is full employment, which means that real GDP equals potential GDP.
• B)the real wage rate rises to allow real GDP to equal potential GDP.
• C)the real wage rate falls to equal the nominal wage rate because real GDP is greater than potential GDP.
• D)there is excess labor supplied, which keeps real GDP less than potential GDP.
• E)there is full employment but real GDP might be greater than, less than, or equal to potential GDP.

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Definitions:

Exceptions

Specific conditions or cases for which the general rule does not apply.

Firm Offers

In contract law, promises made by a seller to hold an offer open to a buyer for a certain period without requiring consideration.

Irrevocable Offers

Offers in a contractual context that cannot be withdrawn, revoked, or altered once made, often for a specific period of time.

Consideration

In contract law, something of value (such as goods, services, or money) exchanged between parties that is necessary for a valid contract.