The graph below shows the labor market. The initial equilibrium is at point A. The new equilibrium
Question:
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a. What factors could have caused the shifts shown on the graph?
b. Show the new equilibrium real wage and quantity of labor on the graph. Have wages and employment increased or decreased?
c. How would your answer to part b. change if the size of the labor demand shift had been greater than the size of the labor supply shift?
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a Increase in demand increase in productivity of labor increase in the capital st...View the full answer
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Related Book For 
Macroeconomics
ISBN: 9780132109994
1st Edition
Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty
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