Which of the following statements is correct?
A)Neither economic theory nor evidence from the U.S. economy suggests that there is a close link between productivity and real wages.
B)Economic theory suggests that there is a close link between productivity and real wages, but evidence from the U.S. economy fails to confirm that link.
C)Evidence from the U.S. economy suggests a close link between productivity and real wages, but economic theory provides no basis for such a link.
D)Both economic theory and evidence from the U.S. economy suggest that there is a close link between productivity and real wages.

Question

Quizplus · Accepted Answer

Economic theory suggests that as productivity increases, the value of each worker's contribution to production also increases, leading to higher wages. Empirical evidence from the U.S. economy supports this theory, as studies have shown that productivity gains are typically associated with increases in real wages. Therefore, both economic theory and evidence from the U.S. economy suggest a close link between productivity and real wages.

Which of the Following Statements Is Correct