What are the unintended consequences of raising minimum wage? Explain why these consequences would happen.
What will be an ideal response?
Significant increases in minimum wage tend to create unemployment. The main reason for this is that an increase in minimum wage makes production costs higher. As a result, companies are forced to raise the prices of their products. However, consumers will notice this and many will refuse to buy a product at a higher price. Therefore, rather than raising product prices too high, companies would probably replace low-skilled worker earning the minimum wage with technological advances, such as robots. Because of this, many people will become unemployed.
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When an expansion is triggered by a(n) ________ in autonomous expenditure, the economy turns the corner into ________, and aggregate planned expenditure exceeds real GDP. Firms' inventories ________
A) increase; recession; decrease B) increase; recession; increase C) increase; expansion; increase D) increase; expansion; decrease E) decrease; expansion; decrease
The effect of an import quota is
A) to shift the supply curve up by the amount of the quota. B) to lead to a decrease in demand. C) to make the supply curve vertical at the amount of the quota. D) to make the supply curve horizontal at the amount of the quota.
Which of the following is not a benefit to lenders/investors of financial intermediation?
a. Lower transaction costs than the direct market. b. Lower risks than the direct market. c. More diversification than the direct market. d. More convenient than the direct market. e. Higher yield than the direct market.
Which of the following is an example of public ownership of a monopoly?
a. DeBeers b. Microsoft c. U.S. Postal Service d. AT&T