Suppose that a war is fought will biological weapons. The weapons destroy people but not capital. What is likely to happen to equilibrium wages and rental rates after the war when compared to their values before the war?
AWages rise, and rental rates rise
BWages rise, and rental rates fall
CWages fall, and rental rates rise
DWages fall, and rental rates fall
Correct answer
B. Wages rise, and rental rates fall
Explanation
The correct answer is Wages rise, and rental rates fall.