The Labor Supply Curve

question 107

Multiple Choice

The labor supply curve

• A) slopes upward to illustrate that more people will want to work as the real wage increases
• B) slopes upward to illustrate that changes in the real wage are directly proportional to changes in the nominal wage
• C) may slope either upward or downward,depending upon the real wage
• D) slopes downward to illustrate that a decrease in the real wage decreases the number of individuals willing to work
• E) slopes downward to illustrate that the availability of workers is directly proportional to the real wage

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Definitions:

Labor Contracts

Agreements between employers and employees or unions that define terms of employment, salaries, benefits, and working conditions.

Short-run Phillips Curve

A graphical representation showing the inverse relationship between unemployment rates and inflation rates in the short-term.

Per-capita Income

The average income earned per person in a certain area, calculated by dividing the area's total income by its total population.

Rational Expectations School

An economic idea that assumes individuals make predictions about the future based on all available information and past experiences in a rational manner.