Because of labour hoarding, an increase in output may signal:
A) a decrease in productivity.
B) no change in productivity.
C) an increase in employment.
D) an increase in productivity.
E) a decrease in employment.

Question

Quizplus · Accepted Answer

Labour hoarding refers to a situation where firms retain excess employees during a period of low output or demand. In this situation, an increase in output while the same level of employment is maintained signals an increase in productivity, as more output is being produced per worker.

Because of Labour Hoarding, an Increase in Output May Signal