Which of the following statements are TRUE regarding the demand for labor?
I. The quantity of labor demanded depends on the real wage rate.
II. If the money wage rate increases and the price level remains the same, the quantity of labor demanded decreases.

Question

Quizplus · Accepted Answer

Both statements are true. I is correct because the demand for labor is influenced by the real wage rate, which is the wage rate adjusted for inflation, affecting the cost of employing workers. II is correct because if the money wage rate (the nominal wage) increases while the price level remains constant, the real wage (purchasing power of the wage) increases, making labor more expensive for employers, which typically leads to a decrease in the quantity of labor demanded.

Which of the Following Statements Are TRUE Regarding the Demand