Refer to the following figure when answering the following questions.
Figure 15.1: The Labor Market
-Consider Figure 15.1, which is a representation of the labor market. If an economy improves its legal system, you would see a shift from curve ________ because this is an example of a(n) ________.
A) increase in TFP
B) decrease in consumption
C) increase in the saving rate
D) rise in the nominal wage
E) None of these answers is correct.

Question

Refer to the following figure when answering the following questions.
Figure 15.1: The Labor Market 
-Consider Figure 15.1, which is a representation of the labor market. If an economy improves its legal system, you would see a shift from curve ________ because this is an example of a(n) ________.
A) increase in TFP 
B) decrease in consumption 
C) increase in the saving rate 
D) rise in the nominal wage 
E) None of these answers is correct.

Quizplus · Accepted Answer

An improvement in the legal system would increase the productivity of workers, which would shift the production function upward and thus shift the labor demand curve to the right. This is an example of an increase in total factor productivity (TFP). None of the other choices accurately describe the effect of an improvement in the legal system on the labor market.

Refer to the Following Figure When Answering the Following Questions