Which of the following has a tendency to raise the unemployment rate?
A)Implementing a minimum wage in an economy.
B)Firms deciding to pay efficiency wages in an economy.
C)The establishment of effective trade unions in an economy.
D)All of these options are correct.

Question

Quizplus · Accepted Answer

All of these options can lead to higher unemployment rates. Implementing a minimum wage can lead to unemployment if the minimum wage is set above the equilibrium for low-skilled workers, as employers may hire fewer workers or automate. Firms paying efficiency wages (wages above the market rate to increase productivity) can also lead to unemployment, as the higher wages can reduce the number of employees a firm can afford to hire. The establishment of effective trade unions can push wages above the market equilibrium, potentially leading to higher unemployment as employers may reduce hiring or lay off workers to maintain profitability.

Which of the Following Has a Tendency to Raise the Unemployment