The model predicts that an economic expansion caused by an increase in technology, A, will:
A)drive down the real wage.
B)cause labour supply to be greater than labour demand.
C)drive up the real wage.
D)lead to a relatively low real wage.

Question

Quizplus · Accepted Answer

An increase in technology will likely increase productivity, leading to a greater demand for labor. As labor demand increases, the real wage (the wage adjusted for inflation) will rise due to the higher demand for labor. Therefore, choice C is correct. Choices A, B, and D are incorrect.

The Model Predicts That an Economic Expansion Caused by an Increase