A Binding Minimum Wage Established by the Government

question 34

Multiple Choice

A binding minimum wage established by the government

• A)is essentially a price ceiling that creates a shortage of workers.
• B)will be effective only if the minimum wage is set below the free-market equilibrium wage.
• C)will have no effect on the quantity of labour employed.
• D)will affect adversely only those workers whose value of productivity is greater than this minimum wage.
• E)is a price floor that will create a surplus of workers if the labour market is competitive.

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Definitions:

Term Annuity

An insurance product that pays out income over a fixed period or term, not necessarily for life.

Compounded Monthly

This involves the recalculating of interest on a loan or investment by taking into account both the initial principal and the accumulated interest from previous periods, recalculated on a monthly basis.

Life Annuity

A financial product providing a series of payments at regular intervals for the remainder of the annuitant's life.

Term Annuity

An annuity that provides regular payments for a specific duration or term, as opposed to a lifetime.