Based on wage- setting behaviour, we know that an increase in the unemployment rate will cause:

Name: Based on wage- setting behaviour, we know that an increase in the unemployment rate will cause:
Brand: Quizplus
Rating: 4.8 (55 reviews)

Question

Quizplus · Accepted Answer

An increase in the unemployment rate leads to a decrease in the bargaining power of workers, which in turn leads to a decrease in the real wage. This is reflected by a movement along the WS curve, causing a decrease in the real wage level. Therefore, the correct choice is D.

Based on Wage- Setting Behaviour, We Know That an Increase