Question

1. An increase in the minimum wage is likely to ___ the quantity of labor demanded and at the same time is likely to ___ the quantity of labor supplied.

a.) decrease : increase

b.) increase : decrease

c.) increase : increase

d.) decrease : decrease

2. The consumer price index increased from 120 to 132. if you received a raise equal to 10% during this time period then your real income has decreased. T/F

3. Retired people who are still capable of working are part of the adult population and are part of the labor force. T/F

4. If your employed gives you a raise that is less than the inflation rate than your real salary will have declined. T/F

Answer 1

a) An increase In the minimum wage will decrease the demand for labor and increase the supply at the same time. The answer is "A"

b) An increase in the price index = ((132-120) / 120 )x100 = 10% and the increase in the wages are 10%. The statement that the real income has decreased is "false".

c) "False"

People who have retired but not aged are not part of the work force as they are not looking for a job.

d) "true"

an increase less than inflation is a decrease in the real value of the salary.