ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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better expectations about future economic growth
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lower interest rates
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higher income
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higher unemployment
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higher minimum wage
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Detailed explanation-1: -Minimum wages reduce entry-level jobs, training, and lifetime income. Policymakers often propose a minimum wage as a means of raising incomes and lifting workers out of poverty. However, improvements in some young workers’ incomes as a result of a minimum wage come at a cost to others.
Detailed explanation-2: -A higher wage thus produces a positive substitution effect on labor supply. But the higher wage also has an income effect. An increased wage means a higher income, and since leisure is a normal good, the quantity of leisure demanded will go up. And that means a reduction in the quantity of labor supplied.
Detailed explanation-3: -As well as demand, pay will be determined by supply. Skills/Qualifications. Workers who have specialist skills will generally be awarded higher pay.
Detailed explanation-4: -In addition to reducing employment, the higher wage under the minimum wage legislation leads to more unemployment, defined as the number of workers seeking a job at a given wage minus the number of jobs available.