You Work for an Unemployment Agency That Distributes Unemployment Checks

question 83

Essay

You work for an unemployment agency that distributes unemployment checks to unemployed workers in your state.Your boss recently learned that the president proposed a 21 percent increase in the minimum wage,and she wants you to provide her with an estimate of the number of additional workers who will file for unemployment compensation claims next year if the bill passes.Based on library research at a nearby university,you learn that about 200,000 workers in your state earn at or below the current minimum wage.Further library research turns up a study that reports the own price elasticity of demand for minimum wage earners to be −0.30.Based on your findings,how many additional workers do you think will file unemployment claims in your state?

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Definitions:

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for overseeing U.S. monetary policy and financial institutions.

Congress

The national legislative body of a country, particularly in the United States, consisting of two houses: the Senate and the House of Representatives.

Federal Funds Rate

The interest rate at which depository institutions lend reserve balances to other depository institutions overnight, on an uncollateralized basis.

Short-Term Loans

Loans that are scheduled to be repaid in less than a year.