An economy is experiencing a significant increase in its overall level of employment. Which of the following concurrent events would be classified as causing an upward shift of the wage-setting curve, as opposed to a movement along it?

Impact of Labor Market Legislation

All of the following events would cause an upward shift in the economy-wide wage-setting curve EXCEPT:

A country's government passes new legislation that significantly strengthens the legal power of trade unions during collective wage negotiations. In the context of the economy-wide wage-setting model, what is the most direct and immediate consequence of this policy change?

An economy simultaneously experiences the passage of new laws that make it more difficult for firms to dismiss workers and a separate, unrelated technological boom that leads to a significant decrease in the overall unemployment rate. How would these two events, respectively, influence the position of the economy-wide wage-setting curve?

A significant, economy-wide decrease in the unemployment rate will cause the wage-setting curve to shift upward.

Comparative Analysis of Labor Market Policies

Analyzing the Impact of Unemployment Benefits

Match each economic event with its most likely effect on the economy-wide wage-setting (WS) curve. The WS curve shows the real wage necessary at each level of economy-wide employment.

The Common Mechanism of Wage-Setting Curve Shifts

Upward WS Curve Shift as a Source of Cost-Push Inflation