A decrease in labor productivity and the real wage could be caused by
A)a decrease in demand for labor or an increase in the supply of labor.
B)a decrease in the demand for labor or a decrease in the supply of labor.
C)an increase in the demand for or supply of labor.
D)an increase in the demand for labor or a decrease in the supply of labor.

Question

Quizplus · Accepted Answer

A decrease in labor productivity and the real wage can be caused by either a decrease in the demand for labor, which would lower the price (wage) employers are willing to pay for labor, or an increase in the supply of labor, which would increase the number of workers available, thus also potentially lowering wages due to excess supply.

A Decrease in Labor Productivity and the Real Wage Could