In the long run, what is the real wage determined by?This is a multi answer question. You can select one or more options as the answer.A.Labour supplyB.The marginal product of labourC.Price levelD.Inflation rate

In the long run, the real wage is determined by:

A. Labour supply: The supply of labour can affect real wages. If there is a surplus of labour (more people looking for jobs than there are jobs available), this can put downward pressure on wages. Conversely, if there is a shortage of labour (more jobs available than there are people looking for work), this can put upward pressure on wages.

B. The marginal product of labour: This is the additional output that an additional unit of labour produces. If the marginal product of labour is high, employers may be willing to pay higher wages to attract more workers. Conversely, if the marginal product of labour is low, employers may not be willing to pay as high wages.

The other options (C and D) are not typically considered determinants of real wages in the long run:

C. Price level: While changes in the price level can affect the purchasing power of wages, they do not typically determine the level of wages themselves. In the long run, changes in the price level are often offset by changes in nominal wages, leaving real wages unaffected.

D. Inflation rate: Similar to the price level, while inflation can affect the purchasing power of wages, it does not typically determine the level of wages themselves. In the long run, expected inflation is often incorporated into nominal wage contracts, leaving real wages unaffected.

In the long run, the real wage is determined by:

A. Labour supply: The supply of labour can affect the real wage. If there is a surplus of labour (more people are available for work than there are jobs available), this can drive down wages. Conversely, if there is a shortage of labour, this can drive up wages.

B. The marginal product of labour: This is the additional output that can be produced by employing one more unit of labour. If the marginal product of labour is high, this can lead to higher real wages.

Therefore, the correct answers are A. Labour supply and B. The marginal product of labour.

The price level and inflation rate are more related to nominal wages rather than real wages. Real wages are adjusted for inflation and reflect the purchasing power of the wages, while nominal wages are not adjusted for inflation.