An efficiency wage
A. increases the unemployment rate since firms pay a higher-than-market wage that increases the quantity of labor supplied.
B. decreases the unemployment rate since it increases the labor productivity.
C. decreases the unemployment rate since firms pay a lower-than-market wage that decreases the quantity of labor supplied.
D. has no impact whatsoever on the unemployment rate.
Answer: A. increases the unemployment rate since firms pay a higher-than-market wage that increases the quantity of labor supplied.