If the Current Wage Is Below the Market Equilibrium Level

question 73

Multiple Choice

If the current wage is below the market equilibrium level in a competitive labor market:

• A)firms will demand more labor than workers are willing to supply.
• B)firms will be able to offer lower wages and still fill all the jobs they have.
• C)unemployment will persist until the wage increases.
• D)All of these are true.

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Definitions:

Constant Dollar

An accounting method that adjusts financial statements for inflation, thereby allowing comparison of buying power across different periods.

Inflation

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.

Initial Withdrawal

The first amount of money taken out from an investment or retirement account.

Fixed Cash Flow

Stable and predictable cash inflows or outflows over a period, crucial for budgeting and financial planning.