Please help me answer this question **Question on Labor Economics:**In the Mortensen-Pissarides model, the wage-setting curve gives a _____ relationship between the real wage and market tightness because as market tightness increases, the outside options of the worker _____.**Options:**- Positive; worsen- Negative; worsen (selected)- Negative; improve- Positive; improve- Positive; remain unchanged**Explanation:**This question tests the understanding of the Mortensen-Pissarides model within labor economics, specifically focusing on the dynamics of the wage-setting curve. The model typically describes a negative relationship between real wages and market tightness due to the impact on workers' outside options. As market tightness increases, there are fewer outside options available to workers, reinforcing a negative correlation.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the Mortensen-Pissarides labor market environment model the main elements: are flows between labor market states, determination of wage, and job creation. The market tightness means a condition when employment becomes scarce and number of unemployed people rises causing a negative impact on the real wage

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