Figure 20-4

In Figure 20-4, which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

Question

Figure 20-4

In Figure 20-4, which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

Quizplus · Accepted Answer

Panel 2 shows a decrease in employment (increase in unemployment) while wages remain unchanged or sticky, indicating that the union is not allowing the wage to fall. This is consistent with a union suffering unemployment during a recession. Panels 1, 3, and 4 show a decrease in employment as well, but wages are depicted as falling, indicating that the labor market is adjusting to the recession through a decrease in wages rather than unemployment due to sticky wages.

Figure 20-4 In Figure 20-4, Which Panel Depicts a Union Suffering Unemployment