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:

Herfindahl Index

A measure of market concentration that is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers.

Economic Concentration

The degree to which a small number of firms occupy a large proportion of the market in a particular industry.

Market Shares

The portion of a market controlled by a particular company or product.

Horizontal Merger

A business consolidation that occurs between firms that operate in the same industry.