Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
List and explain all possible direct and indirect potential impact of minimum wage on
1. Employment
2. Poverty
3. Inequality
Expert Solution
Step 1
Impact of increase in wage rate on the economy is as follows :
i) The first and foremost impact of the increase in minimum wage on the economy would be that income of the people will increase and it will also increase the level of consumption in the economy.
ii) It could also lead to inflation in the economy as it will increase the cost of products for the suppliers.
iii) It will also increase the employment in the economy As higher minimum wage rate will encourage more and more people to come out and work.
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