A bird flu epidemic causes many people to flee the country,but does not affect labor demand significantly because almost all the goods produced within the country are exported.What happens to current employment and the real wage rate?

Question

Quizplus · Accepted Answer

Since the labor demand is not affected significantly, employment would not decrease much. However, many people have fled the country, so the labor supply would decrease. As a result, the real wage rate would increase. Therefore, the correct choice is D, employment would decrease and the real wage would increase.

A Bird Flu Epidemic Causes Many People to Flee the Country,but