What factors determine the differences in salaries, wages, and ...

[Shelles]

What factors determine the differences in salaries, wages, and income that we observe?
 
  What will be an ideal response?

Question 2

Monetarism is a school of thought put forth by Milton Friedman. He argued that the economy would most likely
 
  A) be unstable. B) be at potential GDP.
  C) be above potential GDP. D) be below potential GDP.

[josephsuarez]

Answer to Question 1

Differences in wage and salary incomes across households result from differences in the characteristics of workers (skills, training, education, experience, and so on) and from differences in jobs (dangerous, exciting, glamorous, difficult, and so on). Household income also varies with the number of household members in the labor force, and it can decline sharply if members become unemployed.

Answer to Question 2

B