Unformatted text preview: explain booms and recessions. The demand for labor is determined largely by how productive labor is, and this is slow to change. Similarly, the labor supply curve—which arises from the preferences of millions of families about working in the market—is unlikely to shift suddenly enough to explain recessions. Further, in recessions, an unusually large number of people are looking for work. But this observation is not consistent with a leftward shift in the labor supply curve, which would mean that fewer people want to work. 4. A quick glance at Table 1 in the chapter shows that this statement is false. While some economic fluctuations are caused by changes in military spending, others have been caused by changes in business investment, new home construction, and spending on cars and other energy-related products....
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- Spring '08
- Unemployment, Labor Supply, economic fluctuations, half-century economic fluctuations