Refer to the following figure when answering
Figure 15.1: The Labor Market
-Consider Figure 15.1, which is a representation of the labor market. In 2005, Hurricane Katrina hit the Gulf Coast of the United States; this would cause a shift from curve ________ because this is an example of a(n) ________.
A) $b \rightarrow a$; increase in tax rates
B) $d \rightarrow c$; increase in government spending
C) $a \rightarrow b$; negative TFP shock
D) $c \rightarrow d$; rise in exchange rates
E) None of these answers are correct.

Question

Refer to the following figure when answering     
Figure 15.1: The Labor Market 
-Consider Figure 15.1, which is a representation of the labor market. In 2005, Hurricane Katrina hit the Gulf Coast of the United States; this would cause a shift from curve ________ because this is an example of a(n) ________.
A) $b \rightarrow a$; increase in tax rates 
B) $d \rightarrow c$; increase in government spending 
C) $a \rightarrow b$; negative TFP shock 
D) $c \rightarrow d$; rise in exchange rates 
E) None of these answers are correct.

Quizplus · Accepted Answer

A negative TFP shock would cause a shift from curve a to b because it would reduce the productivity of labor, making it more expensive to produce goods and services.

Refer to the Following Figure When Answering b→ab \rightarrow ab→a ; Increase in Tax Rates B)

Refer to the Following Figure When Answering $b \rightarrow a$ ; Increase in Tax Rates
B)