In: Economics
Which of the following factors is likely to induce an increase in the difference between the wage rate and the rental rate of capital, i.e w-r?
Increased immigration into the country. |
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A war that decimates half of a country's capital. |
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A decrease in the productivity of labor. |
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A plague that kills half of a country's labor force. |
Increased immigration into country will increase supply of labor and will bring wage rate down and hence w-r down
War decimatitng capital will increase rental rate of capital hence decreasing w-r
Decrease in labor productivity will bring w down and hence w-r
Plague decreasing labor force will cause shortage of labor increasing wage rate and hence w-r so, last statement increases w-r