Which of the following happens when an economy's labor demand curve shifts to the left without any change in its labor supply curve,assuming all else equal?
A) The equilibrium wage rate rises.
B) The unemployment rate rises.
C) The output of the economy rises.
D) The aggregate price level falls.

Question

Quizplus · Accepted Answer

When an economy's labor demand curve shifts to the left without any change in its labor supply curve, the equilibrium wage rate falls and the quantity of labor demanded decreases. This results in an increase in unemployment, as there are now more workers than there are available jobs. Therefore, option B is the correct answer. The other options are not accurate because there is no reason to believe that a shift in the labor demand curve would affect the output of the economy or the aggregate price level. Also, a decrease in the quantity of labor demanded would not cause the wage rate to rise.

Which of the Following Happens When an Economy's Labor Demand