A Look at Macroeconomic Data Across Countries Reveals That When

question 16

Multiple Choice

A look at macroeconomic data across countries reveals that when economies experience recessions, unemployment rates rise, but wages fall very little, if at all.Which of the following is most likely to support the above observation?

• A)Wages are determined by the interaction of the forces of labor demand and supply.
• B)The demand for labor is derived demand and hence does not fall during recessions.
• C)The labor market usually exhibits perfectly competition.
• D)The labor supply curve becomes perfectly inelastic during recessions.
• E)Long term labor contracts make the wage rates sticky downwards.

---

Definitions:

Rules

Are established guidelines or principles governing behavior or operations, designed to control or govern conduct within various environments.

Sequential View

An approach or process that is carried out in a specific, orderly sequence over time.

Linear

Characterized by sequential progression where events or operations follow one after the other in a straight line.

Interrelated

Things or elements that are connected in such a way that each one influences or affects the others.