As performance pay becomes more common in an economy:
A) wage rates would increase more than productivity in the economy.
B) the number of unemployed workers in the economy would also increase.
C) the inequality of earnings in the economy would also increase.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

With performance pay becoming more common, there would be an increase in inequality of earnings in the economy. This is because those who perform better would receive more pay than those who don't, leading to a wider gap in earnings. Wage rates increasing more than productivity or an increase in unemployment cannot be generalized as outcomes of performance pay becoming more common, as they depend on various other factors in the economy.

As Performance Pay Becomes More Common in an Economy