performance pay is becoming more common in aneconomy:
A)wage rates would increase more than productivity in the economy.
B)the number of unemployed workers in the economy would also increase.
C)the inequality of earnings in the economy would also increase.
D)All of the answers are correct.

Question

Quizplus · Accepted Answer

Performance pay would likely increase earnings for high-performing employees, leading to a greater inequality of earnings in the economy between high-performing employees and lower-performing employees. This could result in a widening wage gap and increased income inequality. Option A is incorrect because performance pay is intended to incentivize employees to increase productivity, so productivity should ideally increase alongside wage rates. Option B is incorrect because there is no clear reason why the number of unemployed workers in the economy would necessarily increase due to the implementation of performance pay.

Performance Pay Is Becoming More Common in Aneconomy