The "Macroeconomics" Rebuttal to the Traditional Analysis of the Minimum

question 27

Multiple Choice

The "macroeconomics" rebuttal to the traditional analysis of the minimum wage argues that

• A)the rich consume less than the poor out of extra income, therefore an increase in the minimum wage increases aggregate demand.
• B)the rich consume more than the poor out of extra income, therefore an increase in the minimum wage increases aggregate demand.
• C)people work harder when they feel they are inadequately compensated, therefore an increase in the minimum wage may actually lower productivity.
• D)in the short run the demand elasticity of labor is such that businesses will actually increase the number of workers hired when the minimum wage increases.

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