When the Labour Market Is in Equilibrium

question 41

Multiple Choice

When the labour market is in equilibrium,

• A) the real wage rate falls to equal the nominal wage rate because real GDP is greater than potential GDP.
• B) there is full employment but real GDP might be greater than, less than or equal to potential GDP.
• C) there is full employment, which means that real GDP equals potential GDP.
• D) the real wage rate rises to allow real GDP to equal potential GDP.
• E) there is excess labour supplied, which keeps real GDP less than potential GDP.

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Definitions:

Jean Piaget

A Swiss psychologist known for his pioneering work in child development and his theory of cognitive development.

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The physical and emotional comfort that an individual receives from touching or being in close physical contact with others.

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An American psychologist best known for his research on maternal separation, dependency needs, and social isolation in rhesus monkeys.