What Is the Effect of Anything That Makes the Efficiency

question 16

Multiple Choice

What is the effect of anything that makes the efficiency wage rise relative to the market-clearing wage?

• A) It increases both the quantity demanded and the quantity supplied of labour.
• B) It decreases both the quantity demanded and the quantity supplied of labour.
• C) It increases the quantity demanded and decreases the quantity supplied of labour.
• D) It decreases the quantity demanded and increases the quantity supplied of labour.

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Definitions:

Fair-Value Hedge

A hedge that protects against changes in the fair value of an asset, liability, or firm commitment that is attributable to a particular risk.

Forward Contract

A derivative financial instrument where two parties agree to buy or sell an asset at a predetermined future date and price.

Spot Rates

The current price at which a particular security, currency, or commodity can be bought or sold for immediate delivery.

Cash-Flow Hedge

A form of hedge accounting that protects against the variability in cash flows of a recognized asset or liability, or a forecasted transaction.