In a frictionless labor market,________.

Question

Quizplus · Accepted Answer

In a frictionless labor market, the wage rate adjusts instantly to clear the market. This means that if there is an excess supply of workers (unemployment), the wage rate will decrease, and if there is an excess demand for workers (shortage), the wage rate will increase. The adjustment is immediate and efficient, leading to a balanced labor market. Hence, option C is the correct answer. Option A and B are incorrect as they are opposite to the effective functioning of a frictionless labor market. Option D is incorrect as it is not necessarily true that the wage rate does not change for long periods of time.

In a Frictionless Labor Market,________