If the Productivity of Farmers Has Risen Substantially Over Time

question 110

Multiple Choice

If the productivity of farmers has risen substantially over time because of technological progress, and workers can move freely between being farmers and barbers, the neoclassical theory of distribution predicts that the real wage(s) of:

• A) both barbers and farmers should have remained constant over time.
• B) both barbers and farmers should have risen over time.
• C) farmers should have risen while the real wage of barbers should have remained constant.
• D) barbers should have risen while the real wage of farmers should have remained constant.

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Definitions:

Surpluses

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Great Recession

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Great Recession

A significant global economic downturn that occurred from late 2007 through to 2009, marked by severe declines in economic activity worldwide.

Financial Crisis

A broad term for a situation in which financial assets suddenly lose a large part of their nominal value, leading to market disruptions and potentially an economic downturn.