In the DMP model,an increase in productivity does not
A) reduce the unemployment rate.
B) increase the vacancy rate.
C) increase labor market tightness.
D) increase the size of the labor force.

Question

Quizplus · Accepted Answer

In the DMP model, an increase in productivity leads to an increase in output and profits for firms, which can stimulate firms to hire more workers. This can lead to a decrease in the unemployment rate, an increase in the vacancy rate, and an increase in labor market tightness. However, an increase in productivity does not directly affect the size of the labor force, as this is determined by demographic factors such as population growth and labor force participation rates.

In the DMP Model,an Increase in Productivity Does Not