Regarding the Categories of Unemployment, How Does a Minimum-Wage Law

question 61

Multiple Choice

Regarding the categories of unemployment, how does a minimum-wage law compare to firms paying higher-than-equilibrium wages?

• A) The minimum wage creates frictional unemployment, while firms paying wages above equilibrium create structural unemployment.
• B) The minimum wage creates structural unemployment, while firms paying wages above equilibrium create frictional unemployment.
• C) The minimum wage and firms paying wages above equilibrium both create structural unemployment.
• D) The minimum wage and firms paying wages above equilibrium both create frictional unemployment.

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Definitions:

Convertible Bond

A bond that can be converted into a predetermined number of the issuer's equity shares at certain times during its life, usually at the discretion of the bondholder.

Shares

Units of ownership interest in a corporation or financial asset that provide a proportion of the corporation's profits.

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, including all interest payments and the repayment of principal.

Coupon Rate

The annual interest rate paid by a bond issuer to the bondholders, typically expressed as a percentage of the bond's face value.