Answer to Question #130561 in Macroeconomics for Ashleene

Question

1) Suppose that flight attendants are laid off during a recession because of an unspoken agreement between the flight attendants and airline executives that wages will not be reduced. This example is consistent with the

A) relative-wage explanation of unemployment.

B) implicit contract explanation of unemployment.

C) explicit contract explanation of unemployment.

D) efficiency wage explanation of unemployment.

2) Workers in the coal mining industry are laid off during a recession because they are unwilling to accept a wage cut unless they know that workers in other industries are receiving similar cuts. This example is consistent with the

A) efficiency wage explanation of unemployment.

B) explicit contract explanation of unemployment.

C) social contract explanation of unemployment.

D) relative-wage explanation of unemployment.

Answer 1

1.(B) implicit contract explanation of unemployment.

2.(A) relative-wage explanation of unemployment.