If All Employers Pay an Efficiency Wage, Then, Comparing Average

question 8

Multiple Choice

If all employers pay an efficiency wage, then, comparing average wages and unemployment rates across areas, and if workers in areas with low unemployment rate can easily find alternative jobs, one would expect

• A) average wages to be directly (positively) related to unemployment rates.
• B) average wages times one minus the unemployment rate to be the same across areas.
• C) the duration of unemployment, but not necessarily the rate, to be inversely related to the average wage.
• D) average wages will be higher in areas with low unemployment rates.

---

Definitions:

Bank

A financial institution licensed to receive deposits, offer loans, and provide other financial services to individuals and businesses.

Negotiable

Capable of being transferred or assigned to another party in return for value received; often used in reference to financial instruments.

Restrictive Endorsement

An endorsement that limits the transferability of an instrument or controls the manner of payment under an instrument.

Transferability

The ease with which ownership rights of certain assets, securities, or financial instruments can be transferred from one party to another.