If the Efficiency Wage Theory Holds

question 109

Multiple Choice

If the efficiency wage theory holds,

• A) wage rigidity that perpetuates a recessionary gap is transformed from a temporary phenomenon to a permanent feature.
• B) self-correction will automatically eliminate a recessionary gap.
• C) increases in real wages will be required to eliminate a recessionary gap.
• D) increases in nominal wages will be required to close a recessionary gap.

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