If labour demand is downward sloping and labour supply is upward sloping, then when labour demand increases faster than labour supply, what is the effect on real wages?

Question

Quizplus · Accepted Answer

When labour demand increases faster than labour supply, the equilibrium wage rate (the real wage) will increase. This is because there are more jobs available than there are workers to fill them, so employers must offer higher wages to attract workers. The upward pressure on wages will continue until the equilibrium point is reached, where the quantity of labour demanded equals the quantity of labour supplied at the new, higher wage rate.

If Labour Demand Is Downward Sloping and Labour Supply Is