According to the classical model, what will happen if there is excess labor supplied at a specific wage level?

In the classical model of economics, the labor market is viewed as self-regulating. When there is excess labor supply at a specific wage level, it means that there are more workers willing to work than there are jobs available at that wage. In response to this excess supply of labor, the classical model posits that wages would decrease.

This wage reduction occurs because employers are not forced to offer the same level of wages when they have more labor available than they need. As a result, to encourage hiring and clear the excess labor supply, employers can offer lower wages to attract the necessary number of employees. Lower wages lead to a movement towards an equilibrium state, where the number of job seekers matches the number of available jobs at that new, lower wage.

In contrast, the other choices do not align with the classical perspective on labor markets. Government intervention, such as establishing work programs or stimulating spending, is typically associated with Keynesian economics instead of the self-correcting nature of the classical model. Similarly, the idea that the equilibrium wage rate would rise contradicts the fundamental concept of excess supply leading to downward pressure on wages.