Maria Tivlinsky and Harry Davis, both interns at an economics research institute in the country Southville, are discussing the effects of the increase in the supply of unskilled labor in the economy. Maria say that the average nominal wage paid to unskilled labor is likely to fall.
This, according to her, would cause firms to hire more workers and will reduce unemployment in the country. Harry however, does not think that unemployment will necessarily fall; too many workers looking for jobs could depress wages and employment on the whole.
It was observed that overall employment in the country did not increase during the next year.
Which of the following, if true would explain this?
A. Foreign firms displaced lesser number of jobs than they created in the country during the year.
B. the minimum wage is the country has not been revised for 5 years
C. Although the economy is said to be recovering form a recession, prices of goods and services are still falling.
D. The government reduced the tax on corporate earning about a year ago.
E. Demand for skilled labor remained robust during the year.