Question

1) According to the theory of efficiency wages, paying an above-equilibrium wage may increase all of the following except

worker effort.

the natural rate of unemployment.

worker turnover.

the quality of a firm's workforce.

2) The main cause of the decline in labor force participation since 2007 is an increase in the number of

people in school.

retired workers.

discouraged workers.

disabled workers.

3) Complete the following statement.

If an economy has a large number of discouraged workers, the unempoyment rate will remain unaffected/be low and the employment-population ratio will be high/low

4) One explanation for the differing numbers of hours worked in the United States and western Europe is

stronger unions in the U.S.

greater taste for leisure in the U.S.

higher taxes in Europe.

more numerous languages in Europe.

.

Answer 1

1) option B)

as efficiency wages are paid, so worker effort, worker turnover & work Quality rises

& Natural unemployment rate falls

2) option C)

School people, retired people & disabled people aren't included in Labor force

3) unaffected & low

Since discouraged workers are not part of Labor force , hence no effect on employement - unemployment, so no effect on unemployment rate

As labor force participation rate

= Labor force size / working age population

So as discouraged workers leads to fall in Labor force, so

Labor force participation will be low

4) option C)

E​​​​​​uropeans tend to enjoy more leisure than US people

Bcoz they have shorter workweek & more holidays , so they work for lesser hours aa compared to US people

& Also europe tax rates are higher than US tax rate system

So Europeans are discouraged to work less