If wage rigidity holds the real wage above the equilibrium level, an increase in the supply of labor will the number unemployed.

Question

Quizplus · Accepted Answer

Wage rigidity holding the real wage above the equilibrium level implies that there is a surplus of labor (excess supply). When the supply of labor increases, the surplus of labor will increase even further, leading to an increase in the number of unemployed. Therefore, the best choice is A.

If Wage Rigidity Holds the Real Wage Above the Equilibrium