Difficulties in determining the cyclical pattern in real wage rates from aggregate data are primarily due to biases due to
A) substitution behavior.
B) substantial differences across different business cycles.
C) variations in the composition of the labour force over the business cycle.
D) changing policy responses to business cycles.
E) variations in inflation and unemployment

Question

Quizplus · Accepted Answer

Variations in the composition of the labor force over the business cycle, such as changes in the age, education, and experience of workers, can affect the aggregate data on real wage rates, making it difficult to determine the cyclical pattern. The other options either do not pertain to biases in determining cyclical pattern in real wage rates or are not the primary source of bias.

Difficulties in Determining the Cyclical Pattern in Real Wage Rates