Assuming no change in the effort curve of employees,the efficiency wage model implies that
A)the real wage is rigid and equals the efficiency wage.
B)the real wage exceeds the marginal productivity of labor.
C)an increase in the marginal productivity of capital will increase the real wage.
D)the real wage is procyclical.

Question

Quizplus · Accepted Answer

The efficiency wage model suggests that employers pay a wage higher than the equilibrium wage to increase productivity and reduce turnover, leading to a situation where the real wage is rigid and equals the efficiency wage.

Assuming No Change in the Effort Curve of Employees,the Efficiency