Which of the Following Explanations Argues That, in Order to Prevent

question 208

Multiple Choice

Which of the following explanations argues that, in order to prevent shirking and lower job turnovers, the real wage will be purposely kept above the equilibrium wage resulting in unemployment?

• A) The efficiency-wage explanation
• B) The job-search explanation
• C) The insider-outsider explanation
• D) The minimum-wage explanation

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Definitions:

CAPM

Capital Asset Pricing Model, a framework used to determine the theoretical expected return of an asset or portfolio, taking into account its risk relative to the overall market.

Expected Return

The anticipated profit or loss from an investment, taking into account the probability of varying outcomes.

Pure Time Value

The portion of an option's price that reflects the potential for value change based on the time remaining until its expiration.

Market Risk Premium

The bonus yield an investor projects to receive by placing their money in a risky market portfolio instead of in assets that carry no risk.