In the Austrian View, in a market economy without government intervention, if there is an unusually...

In the Austrian View, in a market economy without government intervention, if there is an unusually large number of unemployed workers looking for a job without success

Select one:

a. The market wage rate will increase, giving an incentive to many of the workers to accept a new job, and as a result, the labor market will clear rather quickly.

b. The situation will last for a long time, because of the downward stickiness of the wage rate, unless the government intervenes by increasing its spending.

c. The market wage rate will decline, making it profitable for some businesses to hire many of these workers, and as a result, the labor market will clear rather quickly.

d. Many of the businesses will become pessimistic about their future prospects, leading them to decrease their investment in capital goods, and as a result, the number of unemployed workers will become even larger.

Expert Solution

It shall be noted that Austrian views are against government intervention. Hence, option b is ruled out.

Austrian views considers free market is the solution to various economic problems. Thus, issue of unemployed workers looking for job without success would not make businesses pessimistic and further aggravate unemployment problem. Hence option d is ruled out.

The situation that wage rate will fall and business will hire workers at lower wages and labor market will clear rather quickly is the stand that classical economics school of thoughts has taken. Hence, option c is ruled out.

Austrian view believe that when people remain unemployed looking for job in large numbers, market wage rate would increase, giving incentive to workers to accept new jobs and market clears rather rapidly. Austrian view upheld the belief that entrepreneur is alert to unrecognized opportunities for mutual gains. Entrepreneurial discovery helps in bringing innovations and increase productive capacity.

Hence, the option a is correct

Rahul Sunny answered 2 years ago

Without government intervention, the market price moves to the level at which the quantity supplied equals...

Without government intervention, the market price moves to the level at which the quantity supplied equals the quantity demanded through the interactions of supply and demand. But governments intervene in the market now and then to control prices. What are the market inefficiencies the price controls measures such as price ceilings and price floors create? Why do price ceilings and price floors lead to productive and allocative (marketing) inefficiency? Who benefits and who loses from government interventions in markets through...

State and explain three reasons for potential government intervention in cases of market failure government intervention...

State and explain three reasons for potential government intervention in cases of market failure government intervention – provide an example for each of the three reasons you identify

In an economy with limited or no government intervention, resources tend to be optimally distributed. With...

In an economy with limited or no government intervention, resources tend to be optimally distributed. With appropriate example, explain how this happens. (Make sure to provide a good example and your response should be at least 6 sentences).

Outline and explain two basic motivations for government intervention in the economy.

Under what conditions are externalities likely to be internalized without the necessity of government intervention?

Explain why government intervention is important to stabilize the market?

Explain why government intervention is important to stabilize the market? Due to the Covid-19 pandemic, the government of Malaysia has introduced several initiatives since April 2020 and Malaysia Budget 2021. Discuss how these initiatives give impacted you.

The existence of a market failure often invites for government intervention in a particular market. It...

The existence of a market failure often invites for government intervention in a particular market. It is generally recommended that governments should play a facilitating role rather than a direct role in markets. Regulatory interventions should be limited. Appropriate interventions should have three general aims. To improve market infrastructure, Interventions infrastructure would target, Roads, Rail, market-facilities, water points and Health-control infrastructures. To improve information is important for facilitating effective marketing. To improve institutional infrastructure is the most important government role...

Write a brief paragraph detailing certain markets that wouldn't even exist without government intervention or government...

Write a brief paragraph detailing certain markets that wouldn't even exist without government intervention or government investment, and how this led to an increase in overall welfare for society. Please detail how these governmental actions created these markets.

Discuss the difference in Government intervention in the economy that has been brought forward as a...

Discuss the difference in Government intervention in the economy that has been brought forward as a result of the Great Depression to today. Use specific examples and write a summary of your findings.

What are some of the economic arguments for and against government intervention in the market for...

What are some of the economic arguments for and against government intervention in the market for student loans? Do you believe that class size reductions will help student performance?

Question