When a field has high job market demand, what is the typical effect on wages and unemployment risk?

• A. Higher wages and lower unemployment risk
• B. Lower wages and higher unemployment risk
• C. No effect on wages or unemployment
• D. Unemployment rises with wages

Answer: (A)

When a field has strong demand for workers, employers compete to attract applicants, which pushes wages higher. With more job openings relative to the number of people seeking work, unemployment risk also falls because there are more opportunities to get hired. So the typical outcome is higher wages and a lower chance of unemployment. The other patterns would not align with a tight labor market: wages wouldn’t rise with weak demand, and unemployment wouldn’t increase when demand is strong.