table gives information about the economy of Nautica. Suppose that the government introduces a minimum wage of $0.80 an hour.What is the real wage rate, the quantity of labor employed, potential GDP, and unemployment? Does the unemployment arise from job search or job rationing? Is the unemployment cyclical?Table 1 Labor hours (per day )010203040 Real GDP (2012 dollars per year)0100180240280 The real wage rate isan hour and the quantity of labor employed ishours a day.Potential GDP is $a year.Unemployment ishours a day.The unemployment arises fromThe unemploymentcyclical because A. is; minimum wages are part of the arsenal used by the government to fight recession B. is; a minimum wage often creates recession-like conditionsO c. is not; only structural change can create cyclical unemployment D. is not; it is created by the minimum wage and not by the phase of the business cycle
table gives information about the economy of Nautica. Suppose that the government introduces a minimum wage of $0.80 an hour.What is the real wage rate, the quantity of labor employed, potential GDP, and unemployment? Does the unemployment arise from job search or job rationing? Is the unemployment cyclical?Table 1 Labor hours (per day )010203040 Real GDP (2012 dollars per year)0100180240280 The real wage rate isan hour and the quantity of labor employed ishours a day.Potential GDP is $a year.Unemployment ishours a day.The unemployment arises fromThe unemploymentcyclical because A. is; minimum wages are part of the arsenal used by the government to fight recession B. is; a minimum wage often creates recession-like conditionsO c. is not; only structural change can create cyclical unemployment D. is not; it is created by the minimum wage and not by the phase of the business cycle
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:table gives information about the economy of Nautica. Suppose that the government
introduces a minimum wage of $0.80 an hour.What is the real wage rate, the quantity of
labor employed, potential GDP, and unemployment? Does the unemployment arise from job
search or job rationing? Is the unemployment cyclical?Table 1 Labor hours (per day
)010203040 Real GDP (2012 dollars per year)0100180240280 The real wage rate isan hour
and the quantity of labor employed ishours a day.Potential GDP is $a year.Unemployment
ishours a day.The unemployment arises fromThe unemploymentcyclical because A. is;
minimum wages are part of the arsenal used by the government to fight recession B. is; a
minimum wage often creates recession-like conditionsO c. is not; only structural change
can create cyclical unemployment D. is not; it is created by the minimum wage and not by
the phase of the business cycle
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