Joe Sabia,an Assistant Professor of Public Policy at American University

question 32

Multiple Choice

Joe Sabia,an assistant professor of public policy at American University in Washington,DC,says that a 10 percent increase in the minimum wage reduces retail employment by 1 percent and reduces employment among young workers by 3.4 percent.If President Obama is successful increasing the minimum wage by 30 percent as explained in "Obama Wants $9.50 Minimum Wage," we can expect

• A)Employment to decrease by about 30 percent and prices to increase.
• B)Unemployment to increase by about 30 percent and prices to decrease.
• C)Retail employment to decrease by about 3 percent and young workers' employment to decrease by about 10.2 percent.

Calculate and interpret a firm’s debt-equity ratio and its implications on WACC.

Understand the relationship between beta, market risk premium, risk-free rate, and the cost of equity.

Apply the concept of WACC in investment decision-making processes.

Interpret the effect of taxes on the cost of capital.

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Definitions:

Feedback

Information provided regarding aspects of one's performance or behavior, intended to affirm strengths or identify areas for improvement.

Encoding

The process of converting information into a particular form for efficient storage, transmission, or encryption.

Modulation

The process of varying the properties of a waveform to encode information, typically used in telecommunications to transmit data.

Decoding

The process of interpreting or making sense of a message or piece of information received.