If the Minimum Wage Law Sets a Wage Floor Below

question 27

Multiple Choice

If the minimum wage law sets a wage floor below the equilibrium wage in the market for unskilled labor,then the

• A) minimum wage will create a surplus of unskilled labor.
• B) minimum wage will create a shortage of unskilled labor.
• C) minimum wage will not affect the unskilled labor market.
• D) unskilled labor market will change, but we cannot be certain how.

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Definitions:

State Rate

Often refers to the interest rate or tax rate set by individual states, which can vary from one state to another.

FUTA

The Federal Unemployment Tax Act, legislation that funds unemployment compensation programs in the United States.

SUTA

State Unemployment Tax Act, a payroll tax paid by employers to fund state unemployment insurance programs.

State Rate

A specific rate established by individual states, often used in reference to taxes, fees, or interest applicable within that state.