Multiple Choice
The efficiency wage model can be modified to allow real wages to vary over the business cycle by assuming that
A) workers' effort may depend on the unemployment rate and the real wage.
B) during a recession, labor supply will decrease, reducing the efficiency wage.
C) during a recession, productivity will fall, causing a reduction in the efficiency wage.
D) during a boom, labor demand will increase, causing the efficiency wage to rise.
Correct Answer:
Verified
Correct Answer:
Verified
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