Empirical observation of employment and real- wage fluctuations over the business cycle in Canada and other developed countries

Question

Quizplus · Accepted Answer

Empirical observation indicates that employment levels are volatile while real wages are not. This contradicts the New Classical theory, which posits that labour markets always clear, and suggests that involuntary unemployment exists. Therefore, options B, D, and E are incorrect. Option A is also incorrect as it suggests the opposite of the empirical observation.

Empirical Observation of Employment and Real- Wage Fluctuations Over the Business