If the Government Reduced the Minimum Wage and Pursued Contractionary

question 119

Multiple Choice

If the government reduced the minimum wage and pursued contractionary monetary policy, then in the long run

• A)both the unemployment rate and the inflation rate would be lower.
• B)the unemployment rate would be lower and the inflation rate would be higher.
• C)the unemployment rate would be higher and the inflation rate would be lower.
• D)the unemployment rate and the inflation rate would be higher.

---

Definitions:

Income Elasticity of Demand

A metric that gauges the sensitivity of demand for a product to shifts in the income of consumers.

Weekly Income

The total amount of earnings received by an individual or entity over the span of a week.

Bars of Chocolate

Solid blocks of chocolate that can vary in cocoa content, sweetness, and added ingredients, enjoyed as confectionary treats.

Change in Income

The variation, either increase or decrease, in the amount of money earned by individuals or households over time.