The Economic Analysis of Minimum Wage Involves Both Normative and Positive

question 256

Multiple Choice

The economic analysis of minimum wage involves both normative and positive analysis. Consider the following consequences of a minimum wage: a. The minimum wage law causes unemployment.
B. Unemployment would be lower without a minimum wage law.
C. Minimum wage laws benefit some workers and harm others.
D. The minimum wage should be more than $7.25 per hour.
Which of the consequences above are positive statements and which are normative statements?

• A) a, b, and c are positive statements; d is a normative statement.
• B) a and b are positive statements; c and d are normative statements.
• C) Only a is a positive statement; b, c and d are normative statements.
• D) a and c are positive statements; b and d are normative statements.

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Definitions:

Discount Yield

A measure of a bond's return, calculated as the bond's discount from its face value divided by its face value, expressed as a percentage.

Bond Market

The financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market.

Over-The-Counter Market

A decentralized market, without a central physical location, where participants trade stocks, commodities, currencies, or other instruments directly between two parties without a broker's intermediation.

Bond Dealers

Entities that trade in bond securities, acting as intermediaries between buyers and sellers in the bond market.