Please adjust the graph to show the impact of a recession, where the theoretical

Question

Please adjust the graph to show the impact of a recession, where the theoretical market equilibrium wage rate falls to $10 an hour. Then answer the two questions to the right of the graph, but assuming wages are sticky downward. If you need to reset the graph to its original state, click on the graph, and then click on the button that looks like this: After the effects of the recession are felt, what is the size of the increase or decrease in unemployment? What is the actual wage rate that predominates in the market?

Explanation / Answer

1. 10 - 8 = 2 Million People

2. $14 per hour

Demand curve will shift left, such that it cuts Supply curve at Wage rate = 10.

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