If the Real Wage Rate Is Such That the Quantity

question 311

Multiple Choice

If the real wage rate is such that the quantity of labor supplied by workers is less than the quantity of labor demanded by firms

• A) the economy is at full employment.
• B) there is a shortage of labor.
• C) the real wage rate will fall to restore equilibrium.
• D) actual real GDP equals potential GDP because firms make the decision about how many workers to hire.

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Definitions:

Inelastic

A description of a situation where the quantity demanded or supplied changes by a smaller percentage than the changes in price.

Demand Sensitive

Reacting to changes in consumer demand, often affecting pricing and production decisions.

Long-Run Demand

The overall demand for a product or service over an extended period, considering changes in market conditions and preferences.

Short-Run Demand

The demand for goods and services in the immediate future, influenced by current prices and income levels.