The Federal Minimum Wage in 2010 Was $7

question 304

Multiple Choice

The federal minimum wage in 2010 was $7.25. If this wage rate was less than the equilibrium wage, what is the effect?

• A) The minimum wage does not create unemployment.
• B) The number of people who want to work at the minimum wage is the same as the number of available jobs.
• C) The number of people who want to work at the minimum wage is greater than the number of available jobs.
• D) Deadweight loss exists.

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Definitions:

Effective Yield

A measure of the return on an investment, taking into account the effect of compounding interest.

Simple Annualized

A method of calculating the return on an investment by annualizing its simple interest without accounting for compounding.

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a specified period of time.

Quarterly Compounded

Interest that is calculated and added to the principal every three months, increasing the amount on which subsequent interest calculations are based.