Question Detail

IRP 321 Compensation Management policies Objective Question

What does the classical economic theory of compensation suggest happens to pay levels if the supply of labour exceeds the demand for labour?

A Pay levels go up.

B Pay levels go down.

Correct Answer

C Pay levels remain constant.

D Pay levels fluctuate unpredictably.

Option B is the correct answer.

Page 18 states: '1. The classical economic theory: If supply of labour exceeds the demand for labour, pay levels go down...'

Think about basic supply and demand principles in the labor market.

Course: IRP 321

Topic: Compensation Management policies

Type: Objective

Difficulty: Not specified