Suppose That Laws Are Passed Banning Labor Unions and That

question 12

Essay

Suppose that laws are passed banning labor unions and that resulting lower labor costs are passed along to consumers in the form of lower prices. Use the aggregate demand-aggregate supply model to illustrate graphically the impact in the short run and the long run of this favorable supply shock. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curves shift; v. the short-run equilibrium values; and vi. the long-run equilibrium values. State in words what happens to prices and output in the short run and the long run.

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Definitions:

Inferior Bodies

Subordinate or lower-level organizations or structures within a larger system or organization.

Provincial Governments

The governing bodies responsible for managing the affairs of a province in a federal system, dealing with areas such as education, health, and transportation.

Federal Government

The national government of a federation which has specific powers delegated to it by a constitution, distinct from state or provincial governments.

Stare Decisis

A legal principle that mandates courts to follow the rulings of previous cases in similar circumstances to ensure consistency.