Question

If an economist observed that both wages and employment decreased in aparticular country, the economist would suggest that it was caused by:a. an increase in the supply of labor.b. an increase in the demand for labor.c. an increase in both the demand for labor and the supply of labor.d. a decrease in the supply of labor.e. a decrease in the demand for labor.

Answer 1

E) a decrease in the demand for labor

Step-by-step explanation:

This can be interpreted as a scenario of economic downturn in which firms tend to produce less, causing unemployment. As unemployment occurs, there will be greater supply for work, but firms will demand less. This divergence between labor supply and demand will lead to wage adjustment, which tends to decrease in recessive scenarios.