What is a minimum wage and what are its effects if it is set above the equilibrium wage?
What will be an ideal response?
A minimum wage is a price floor applied to the labor market. A minimum wage is a government imposed regulation that makes it illegal to charge (or pay) a wage rate lower than a specified level. If the minimum wage is set above the equilibrium wage, it creates a surplus of labor—unemployment—and decreases workers' and firms' surplus.
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Venture capitalists share in the risks and rewards by financing new ventures.
Answer the following statement true (T) or false (F)
What is the opportunity cost of going from point D to point C?
The arithmetic difference between the nominal rate of interest and the expected rate of inflation is the
A. expected interest rate. B. real interest rate. C. implied interest rate. D. contractual interest rate.
The nonlabor income of households will increase, causing consumption to increase and labor supply to decrease, if the government
A. increases the personal income tax. B. implements contractionary fiscal policy. C. decreases transfer payments. D. decreases the corporate profits tax.