Final answer:
Workers earning higher wages can buy more goods and services, and employers may pay higher wages to motivate productivity, leading to a right shift in labor demand. Barriers to trade, however, can lower average wages. The correct option is b) More
Step-by-step explanation:
When workers earn higher wages, they can exchange this extra money for more goods and services, provided that they have confidence in the economy.
Workers who can produce more are typically more desirable to employers, leading to a shift in the demand for their labor to the right, which in turn increases wages in the labor market. Conversely, barriers to trade can have the opposite effect by reducing the average level of wages.
The Efficiency Wage Theory further supports the idea that higher pay can lead to greater productivity, as workers are motivated to work harder and stay with their current employer to maintain their higher earnings.
Thus, employers often find it worthwhile to pay more than what market conditions might dictate, balancing out the costs associated with hiring and training new employees. The correct option is b) More