Which of the following will increase the natural unemployment rate? i) a minimum wage set above the equilibrium wage. ii) efficiency wages iii) union - negotiated waged A. i and iii only. B. i, ii and iii. C. i and ii. D. ii and iii only. E. i only.
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This is because the minimum wage will force firms to pay a higher wage than they would otherwise be willing to pay, which will lead to a decrease in the demand for labor and an increase in the supply of labor. This will result in a surplus of labor, which is Show more…
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