In the one-sided search model, if the job offer rate goes down,
A) the reservation wage goes down and the effect on long-run unemployment is ambiguous.
B) the reservation wage goes up and long-run unemployment goes down.
C) the reservation wage and long-run unemployment are unchanged.
D) the reservation wage goes up and long-run unemployment goes up.
E) unemployed workers stop searching.

Question

Quizplus · Accepted Answer

When the job offer rate decreases, workers lower their reservation wage to increase their chances of accepting a job, but the effect on long-run unemployment is ambiguous as it depends on other factors like the overall job market conditions.

In the One-Sided Search Model, If the Job Offer Rate