Question

Choose the statement about an increase in the population that is incorrect.

A.The real wage rate falls.
B.Potential GDP per hour of labor decreases.
C.Potential GDP grows.
D.The production function shifts upward.

Answer 1

An increase in the population does not necessarily lead to a decrease in the real wage rate.

Step-by-step explanation:

The statement that is incorrect about an increase in the population is A. The real wage rate falls. In reality, an increase in the population can lead to an increase in the demand for labor, which can push up wages. As the demand for labor increases, employers may have to offer higher wages to attract and retain workers. This is because a larger population means more consumers and potentially more economic activity, which can contribute to economic growth. Therefore, an increase in the population does not necessarily lead to a decrease in the real wage rate.