Question

Holding other factors constant, technological progress the real wage and employment. Group of answer choices
a. increases; decreases
b. increases; does not change
c. decreases; increases
d. increase

Answer 1

Answer: Given these general effects, the most accurate answer would be:

a. increases; decreases

Technological progress tends to increase real wages over time due to increased productivity, but it can also lead to decreases in employment in certain sectors or occupations due to labor displacement.

Explanation:

Technological progress can have various effects on the real wage and employment, depending on several factors such as the type of technology, the industry, and the overall state of the economy. However, let's consider the general effects:

When technological progress occurs:

• It tends to increase labor productivity, allowing workers to produce more output per unit of time.
• Increased productivity can lead to higher wages as firms may be willing to pay higher wages to workers who can produce more output.
• However, technological progress can also lead to labor displacement if machines or automation replace certain tasks previously performed by workers.
• Labor displacement can initially lead to unemployment or a decrease in employment in specific industries or occupations.