What would your answer to the previous question be if the current market-clearing wage equaled $7.00?
A) The unemployment would increase.
B) The unemployment would remain the same.
C) The unemployment would decrease.
D) None of the above is correct.

Question

Quizplus · Accepted Answer

If the current market-clearing wage is $7.00 and the actual wage is set above this level, it would lead to excess supply of labor (more people willing to work at the higher wage than there are jobs available), thus increasing unemployment.

What Would Your Answer to the Previous Question Be If