Because efficiency wage theory deals with the consequences of a change in a firm's ________ wage,if all wages were indexed to nominal aggregate demand the theory would be ________.
A)absolute,even more appropriate
B)absolute,rendered inappropriate
C)relative,even more appropriate
D)relative,rendered inappropriate

Question

Quizplus · Accepted Answer

Efficiency wage theory deals with relative wages within a firm, meaning the wages of workers in different positions or with different levels of productivity. If all wages were indexed to nominal aggregate demand, then the relative wages within a firm would not be affected by changes in demand or productivity, rendering the theory inappropriate.

Because Efficiency Wage Theory Deals with the Consequences of a Change