Final answer:
In the wage setting relation, the wage (W) tends to decrease when the unemployment rate (U) decreases, and when unemployment benefits decrease.
Step-by-step explanation:
In the wage setting relation, the wage (W) tends to decrease when the unemployment rate (U) decreases, and when unemployment benefits decrease. This is because when the unemployment rate decreases, there is a smaller pool of unemployed workers available, which gives employers more bargaining power and allows them to lower wages. Similarly, when unemployment benefits decrease, it reduces the financial support provided to unemployed individuals, which can also lead to lower wages.
On the other hand, an increase in the price level (P) or an increase in the minimum wage would not directly lead to a decrease in wages. An increase in the price level might lead to an increase in wages to maintain purchasing power, while an increase in the minimum wage sets a floor below which wages cannot fall.
Therefore, the correct answer is E. all of the above.