Why Does Increasing Employment Not Necessarily Increase Living Standards

question 6

Multiple Choice

Why does increasing employment not necessarily increase living standards?

• A) Productivity always increases as employment increases.
• B) Living standards and employment are always positively related.
• C) Increasing employment may not be accompanied by higher real wages
• D) There is no upper limit to labor force participation.
• E) Real wages are not adjusted for inflation.

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Definitions:

Old Economy

Term referring to traditional industries and economic sectors such as manufacturing, which rely heavily on physical labor and tangible assets.

Market Economy

A market system in which investment, production, and distribution decisions are driven by the forces of supply and demand, with the prices of goods and services being set in a free pricing system.

Abraham Lincoln

The 16th president of the United States, who served during the Civil War and is remembered for abolishing slavery.

Robert Fulton

An American engineer and inventor credited with developing the first commercially successful steamboat in the early 19th century, significantly impacting transportation.