The Unemployment Caused by Minimum Wage Would Be Larger If

question 65

Multiple Choice

The unemployment caused by minimum wage would be larger if

• A) both labor demand and labor supply are more elastic.
• B) both labor demand and labor supply are more inelastic.
• C) minimum wage is set equal to the equilibrium wage rate.
• D) minimum wage is set below the equilibrium wage rate.
• E) both labor demand and labor supply are perfectly inelastic.

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Definitions:

Hyperinflation

Extremely high and typically accelerating inflation, drastically eroding the real value of the local currency.

Real Interest Rate

is the interest rate adjusted for the effects of inflation, representing the true cost of borrowing and the real yield to investors.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.

Demand for Loanable Funds

The desire to borrow money, driven by businesses and individuals who seek financing for investment, consumption, or other purposes, typically influenced by interest rates.