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Consider the Market-Clearing Theory of the Labour Market

Question 21

Multiple Choice

Consider the market-clearing theory of the labour market.Empirical observation of employment and real-wage fluctuations over the business cycle in Canada and other developed countries


A) is not able to refute the market-clearing theory of unemployment.
B) refutes the theory because employment is volatile and real wages are not.
C) refutes the theory because real wages are volatile and employment levels are not.
D) supports the market-clearing theory that there is no involuntary unemployment.
E) supports the market-clearing theory that labour markets always clear.

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