Look at the diagram below. Let's assume that aggregate demand declines and a recession occurs, which causes a decrease in the demand for labor. Assuming prices, wages and salaries are sticky, then what is the total excess labor?

Look at the diagram below. Let's assume that aggregate demand declines and a recession occurs, which causes a decrease in the demand for labor. Assuming prices, wages and salaries are sticky, then what is the total excess labor?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 7P

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Question

Look at the diagram below. Let's assume that aggregate demand declines and a recession occurs,
which causes a decrease in the demand for labor. Assuming prices, wages and salaries are sticky,
then what is the total excess labor?
Salary
$45,000
$25,000
5000 11000 19000
Labor
S
D₁
Do

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