Based on our understanding of the labour market model presented in Chapter 6, we know that an increase in the minimum wage will cause:Question 11Select one:a.a reduction in the equilibrium real wage.b.no change in the equilibrium real wage.c.an increase in the equilibrium real wage.d.no change in the natural rate of unemployment.e.a reduction in the natural rate of unemployment.

Based on our understanding of the labour market model presented in Chapter 7, we know that a reduction in the markup will causeSelect one:A.an increase in the equilibrium real wage.B.a reduction in the natural rate of unemployment and no change in the real wage.C.a reduction in the equilibrium real wage.D.an increase in the natural rate of unemployment.

Question 13According the model of supply and demand, a significant increase in the minimum wage could have the effect of:1 pointcreating a shortage of labor.increasing the demand for labor.making it easier for workers to find jobs.making it harder for workers to find jobs.

Based on wage setting behaviour, we know that an increase in the unemployment rate will causeSelect one:A.a reduction in the real wage.B.an upward shift of the WS curve.C.an increase in the real wage.D.no change in the real wage.

Passage 1 Raising the minimum wage for workers will provide a significant boost to the economy. For example, changing the minimum wage to $10.10 per hour would add $22 billion to the economy by increasing people’s purchasing power. Household spending would increase by $48 billion in one year with a similar minimum wage increase. Increased earnings lead to increased spending and a greater demand for products and services. This phenomenon then leads to the need for more workers and, thereby, job growth. Passage 2 The current federal minimum wage for workers is $7.25. If the government increased that by $1.75, studies show that household spending would also increase—by $48 billion annually. An economic move like this makes too much sense to ignore. A rise in household spending would mean an expansion in the profits of many businesses, including small businesses. As a small-business owner, I would certainly welcome the extra income. The last time the minimum wage was increased, my profit margin increased substantially. My fellow small-business owners experienced a similar profit growth that year. Which passage provides more effective evidence, and why? Passage 1 is more effective because the evidence is logical and does not include fallacies. Passage 1 is more effective because the evidence is logical and cannot be opposed. Passage 2 is more effective because the evidence is emotional and includes two perspectives. Passage 2 is more effective because the evidence is logical and is supported by anecdotes.

(Consider a Macroeconomics perspective) Minimum wage is a government intervention on labour compensation which is equivalent to a price floor in the labour market. Although it aims to protect the well being of workers, it would also increase firms’  (three words). As a result, it would cause the  (two words) to shift leftward, resulting in a decrease in real output and an increase in the  (three words).