Efficiency wages contribute to
A)frictional unemployment and the natural rate of unemployment.
B)frictional unemployment but not the natural rate of unemployment.
C)structural unemployment and the natural rate of unemployment.
D)structural unemployment but not the natural rate of unemployment.

Question

Quizplus · Accepted Answer

Efficiency wages can lead to structural unemployment because they are set above the market-clearing level, causing a surplus of labor. This contributes to the natural rate of unemployment, which includes structural unemployment.

Efficiency Wages Contribute to