According to traditional theory, labor union activity tends to
a. raise all wages for both unionized and nonunionized labor.
b. raise union workers' pay but lower nonunion pay by an offsetting amount. Therefore, labor has only a redistributive effect rather than a net loss or net gain effect.
c. redistribute income from nonunion to union labor but also cause a net loss in income in the economy.
d. precipitate recessions and lower everyone's pay in the long run.
Answer: c. redistribute income from nonunion to union labor but also cause a net loss in income in the economy.