FIGURE 14-2 -Refer to Figure 14-2. Suppose the Labour Market Is Perfectly

question 100

Multiple Choice

FIGURE 14-2
-Refer to Figure 14-2. Suppose the labour market is perfectly competitive. If a minimum wage of W4 is then established, the predicted change in the wage is

• A) an increase in the wage paid.
• B) a decrease in the wage paid.
• C) no change in the wage paid.
• D) a decrease equal to W1 - W4.
• E) an increase equal to W1 - W4.

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Definitions:

Terms of Trade

The ratio of an index of a country's export prices to an index of its import prices, used to measure the relative trading advantage or disadvantage.

Consumption

The use of goods and services by households, constituting one of the primary components of GDP.

Developing Nations

Countries with a lower living standard, undeveloped industrial base, and low Human Development Index (HDI) relative to other countries.

Industrially Advanced Nations

Countries that have highly developed economies, characterized by significant industrial growth and high levels of income.