Based on wage setting behavior,we know that a reduction in the unemployment rate will cause

Question

Quizplus · Accepted Answer

According to wage setting behavior, a reduction in unemployment rate results in a smaller pool of available workers, making it harder for firms to fill vacancies. Firms must then compete for workers which leads to an increase in demand for labor and upward pressure on wages and subsequently, an increase in the real wage. Therefore, the correct answer is (C) an increase in the real wage.

Based on Wage Setting Behavior,we Know That a Reduction in the Unemployment