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4. The following diagram shows the labor market model: Real wage Price setting sits down Wage-setting carus Price setting 1. Owners' power rises relative to consumen jeg lower comp medium to long ru Real wage Real wage Wage-setting curv Wage-setting car Unemployment als Price setting curve Wage-setting car Price-setting curve 2. Employees power rises relative to owners (eg stronger- medium is long run 3. Employees power is relative to cune in a bicycle ping- short to medium run Employment, N The labor market. Source: https://www.core-econ.org/the-economy/book/images/web/figure-15-02-c.jpg Suppose there is an increase in the bargaining power of workers that generates inflation. Which of the following statements is correct? (There may be more than one correct answer). A The bargaining power of workers may increase due to an increase in unemployment benefits, generating a rise in the wage setting curve. B. The bargaining power of workers can be increased by an increase in the unemployment level along a given wage setting curve. C. After the initial increase in the bargaining power of workers, companies adjust wages and prices by shifting the wage setting curve, which generates inflation. D. After the initial increase in the bargaining power of workers, companies adjust their wages and prices, which generates inflation. Neither the wage setting nor the price setting curve shifts.

4. The following diagram shows the labor market model: Real wage Price setting sits down Wage-setting carus Price setting 1. Owners' power rises relative to consumen jeg lower comp medium to long ru Real wage Real wage Wage-setting curv Wage-setting car Unemployment als Price setting curve Wage-setting car Price-setting curve 2. Employees power rises relative to owners (eg stronger- medium is long run 3. Employees power is relative to cune in a bicycle ping- short to medium run Employment, N The labor market. Source: https://www.core-econ.org/the-economy/book/images/web/figure-15-02-c.jpg Suppose there is an increase in the bargaining power of workers that generates inflation. Which of the following statements is correct? (There may be more than one correct answer). A The bargaining power of workers may increase due to an increase in unemployment benefits, generating a rise in the wage setting curve. B. The bargaining power of workers can be increased by an increase in the unemployment level along a given wage setting curve. C. After the initial increase in the bargaining power of workers, companies adjust wages and prices by shifting the wage setting curve, which generates inflation. D. After the initial increase in the bargaining power of workers, companies adjust their wages and prices, which generates inflation. Neither the wage setting nor the price setting curve shifts.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
Problem 4P
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4. The following diagram shows the labor market model: Real wage Price setting sits down Wage-setting carus Price setting 1. Owners' power rises relative to consumen jeg lower comp medium to long ru Real wage Real wage Wage-setting curv Wage-setting car Unemployment als Price setting curve Wage-setting car Price-setting curve 2. Employees power rises relative to owners (eg stronger- medium is long run 3. Employees power is relative to cune in a bicycle ping- short to medium run Employment, N The labor market. Source: https://www.core-econ.org/the-economy/book/images/web/figure-15-02-c.jpg Suppose there is an increase in the bargaining power of workers that generates inflation. Which of the following statements is correct? (There may be more than one correct answer). A The bargaining power of workers may increase due to an increase in unemployment benefits, generating a rise in the wage setting curve. B. The bargaining power of workers can be increased by an increase in the unemployment level along a given wage setting curve. C. After the initial increase in the bargaining power of workers, companies adjust wages and prices by shifting the wage setting curve, which generates inflation. D. After the initial increase in the bargaining power of workers, companies adjust their wages and prices, which generates inflation. Neither the wage setting nor the price setting curve shifts.
Transcribed Image Text:4. The following diagram shows the labor market model: Real wage Price setting sits down Wage-setting carus Price setting 1. Owners' power rises relative to consumen jeg lower comp medium to long ru Real wage Real wage Wage-setting curv Wage-setting car Unemployment als Price setting curve Wage-setting car Price-setting curve 2. Employees power rises relative to owners (eg stronger- medium is long run 3. Employees power is relative to cune in a bicycle ping- short to medium run Employment, N The labor market. Source: https://www.core-econ.org/the-economy/book/images/web/figure-15-02-c.jpg Suppose there is an increase in the bargaining power of workers that generates inflation. Which of the following statements is correct? (There may be more than one correct answer). A The bargaining power of workers may increase due to an increase in unemployment benefits, generating a rise in the wage setting curve. B. The bargaining power of workers can be increased by an increase in the unemployment level along a given wage setting curve. C. After the initial increase in the bargaining power of workers, companies adjust wages and prices by shifting the wage setting curve, which generates inflation. D. After the initial increase in the bargaining power of workers, companies adjust their wages and prices, which generates inflation. Neither the wage setting nor the price setting curve shifts.
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