In a Graph Showing the Market Supply and Demand for British

question 261

Multiple Choice

In a graph showing the market supply and demand for British pounds in terms of U.S. dollars, the demand-for-pounds curve is downsloping because

• A) fewer British pounds can be purchased if pounds become less expensive.
• B) fewer U.S. dollars can be purchased if British pounds become less expensive.
• C) more U.S. dollars can be purchased if British pounds become more expensive.
• D) more British pounds can be purchased if pounds become less expensive.

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Definitions:

Efficiency Wage Rate

A wage rate set above the market-clearing level by employers to boost worker productivity, discourage shirking, and reduce turnover.

Wage Rigidity

Wage rigidity refers to the phenomenon where wages do not adjust quickly or easily to changes in labor market conditions, often due to contracts, norms, or regulations.

No Shirking Constraint

An economic principle suggesting that wages must be set at a level that discourages employees from shirking their duties.

Supply of Labor Curve

A graphical representation showing the relationship between the wage rate and the quantity of labor that workers are willing to supply.