Question 49
Labour MarketA valid explanation for real wage growth is
- A.an increase in the rate of productivity.
- B.the rising cost of capital accumulation.
- C.a contraction of employment in service industries.
- D.an increase in the quantity of labour.
Show the answer and explanation
Answer: A (an increase in the rate of productivity.)
Explanation
When workers produce more per hour, firms can afford to pay them more in real terms.