The figure depicts the labor market when there has been a negative aggregate demand shock. Which of the following statements are correct? - The equilibrium level of unemployment i... The figure depicts the labor market when there has been a negative aggregate demand shock. Which of the following statements are correct? - The equilibrium level of unemployment is N_L - N_B. - The new long-run equilibrium is point B with N_B workers employed. - N_L - N_X and N_L - N_B are the levels of involuntary unemployment at X and B, respectively. - The demand-deficient unemployment at B is N_L - N_B.
Understand the Problem
The question is asking us to analyze a labor market diagram after a negative aggregate demand shock and determine which statement about equilibrium levels of unemployment and worker employment is correct.
Answer
All statements provided are correct regarding the labor market after a negative aggregate demand shock, based on the given figure.
All the statements are correct.
Answer for screen readers
All the statements are correct.
More Information
A negative aggregate demand shock leads to a decrease in employment and creates involuntary unemployment, as firms reduce hiring due to lower demand for goods and services.
Tips
Understanding the graph and its axes, especially what the curves represent is crucial to answering such questions. Also consider how a negative aggregate demand shock would affect employment and wages.
Sources
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