If the Cost of Living Is Higher in Richer Cities

question 48

Multiple Choice

If the cost of living is higher in richer cities than in poorer cities, and the nominal minimum wage were the same in every city, then the real purchasing power of the minimum wage would necessarily be

• A)higher in the richer cities.
• B)higher in the poorer cities.
• C)lower in the poorer cities.
• D)independent of the cost of living in any city.

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Definitions:

Unemployment

The condition in which a capable worker who is actively seeking employment is unable to find work.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in bank accounts.

Phillips Curve

An economic theory that suggests an inverse relationship between the level of unemployment and the rate of inflation.

Money Supply

The full amount of economic monetary assets at a specific point in time.