If an Increase in the Minimum Wage Increases Workers' Incomes

question 59

Multiple Choice

If an increase in the minimum wage increases workers' incomes by $75 and reduces employers' incomes by $100, while workers' spend all of their income increase but employers reduce their spending by only seventy-five percent of their income reduction, aggregate spending

• A)falls by $5.
• B)falls by $25.
• C)falls by $80.
• D)remains unchanged.

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Definitions:

Bond Interest Expense

The cost that an issuer of bonds incurs over the bond term as interest payments to bondholders, as dictated by the interest rate of the bond.

Floating-rate Debt

A form of borrowing where the interest rate varies over time with market conditions, opposed to fixed-rate debt.

Market Value

Market value is the current price at which an asset or service can be bought or sold in the marketplace.

Floating-rate Debt

Debt instruments that have variable interest rates, which can change over the duration of the instrument based on market conditions.