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:

Sandstone

A clastic sedimentary rock composed mainly of sand-sized mineral particles or rock fragments.

Rounded Pebbles

Smooth, round stones typically formed by the prolonged action of water or other forms of erosion and weathering on rocks.

Sandstone

A sedimentary rock made primarily of sand-sized grains of minerals or fragments of rocks, classified as clastic.

River

A significant stream of water that moves through a natural channel, heading towards the sea, a lake, or joining another stream.