Using a market-clearing model to analyze the labour market is _____ because wages usually change _____.
A)realistic; frequently
B)realistic; infrequently
C)unrealistic; frequently
D)unrealistic; infrequently

Question

Quizplus · Accepted Answer

A market-clearing model assumes that wages adjust quickly to equate supply and demand. However, in reality, wages tend to change infrequently due to contracts, regulations, and other frictions, making the model unrealistic.

Using a Market-Clearing Model to Analyze the Labour Market Is