The table given below reports the average hourly wage received by laborers and the price index for two years. Table 8.2
Refer to Table 8.2.The data in the table suggests that in year 2:
A)aggregate supply remains constant.
B)aggregate demand decreases.
C)aggregate supply decreases.
D)aggregate demand increases.
E)aggregate supply increases

Question

The table given below reports the average hourly wage received by laborers and the price index for two years. Table 8.2
 Refer to Table 8.2.The data in the table suggests that in year 2:
A)aggregate supply remains constant. 
B)aggregate demand decreases. 
C)aggregate supply decreases. 
D)aggregate demand increases. 
E)aggregate supply increases

Quizplus · Accepted Answer

The decrease in average hourly wage from year 1 to year 2 suggests a decrease in aggregate supply, as wages typically increase with a higher level of output and employment. However, the price index remaining constant implies that aggregate demand did not change, as a decrease in aggregate demand would lead to a decrease in prices. Therefore, the best choice is C, where only aggregate supply decreased.

The Table Given Below Reports the Average Hourly Wage Received