An economy, where total output is directly proportional to the number of people working, experiences a significant and sustained increase in its production of goods and services. Based on this relationship, what is the most likely immediate consequence for the labor market?

An economy, where the total output of goods and services is directly proportional to the number of people employed, enters a period of economic expansion (a 'boom'). Arrange the following events in the correct causal sequence that describes the impact on the labor market.

Impact of Productivity Shocks on Employment

The Link Between Economic Output and Unemployment

Price Setting and Real Wage Adjustment to the PS Curve

Figure 4.7: Adding Output to the Causal Chain