Questions and Answers
What is the primary reason why wages are slow to respond to shifts in the economy?
Sticky wages due to various factors
What is the term for wages deliberately set above the market rate to increase productivity?
Efficiency wages
During an economic slowdown, what happens to the labor demand curve?
It shifts to the left
Why does unemployment tend to be a lagging indicator?
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What is the primary purpose of unemployment insurance?
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How do labor unions influence the labor market?
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What is the effect of taxes on wage income on unemployment?
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Why do firms might voluntarily choose to pay higher wages than necessary?
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What is the term for the pattern of short-term ups and downs in the economy?
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What happens to the market wage during a recession?
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