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wrightjb wrightjb
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4 years ago

Question 1.

According to the relative-wage explanation of unemployment, workers will be willing to accept wage cuts only if



▸ they know that unemployment is increasing in other industries.

▸ they can be convinced that they are overpaid relative to workers doing similar jobs at other firms.

▸ they know that workers in other firms and industries are receiving similar cuts.

▸ the economy is in a prolonged recession.

Question 2.

Workers in the textile industry are laid off during a recession because they are unwilling to accept a wage cut, unless they know that workers in other industries are receiving similar cuts. This example is consistent with the



▸ relative-wage explanation of unemployment.

▸ explicit contract explanation of unemployment.

▸ social contract explanation of unemployment.

▸ efficiency wage explanation of unemployment.
Textbook 
Principles of Economics

Principles of Economics


Edition: 12th
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Curtis x.Curtis x.
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wrightjb Author
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4 years ago
Smart ... Thanks!
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