Deck 8: Policy Application: the Minimum Wage

Question 1

The value of the minimum wage has declined markedly since ______ and today its real value is approximately ______ what it was over half a century ago.

A) the 1950s;75 percent of
B) the 1950s;equal to
C) the mid-1970s;equal to
D) the 1980s;75 percent of
E) the 1980s;equal to

Answer 1

C

Question 2

Which of the following explains why increasing the minimum wage may fail to reduce income inequality or the poverty rate?

A) The Wessel's effect only applies to those workers with fringe benefits.
B) Employers may expect increased effort from workers after a minimum wage increase.
C) The majority of those affected by the minimum wage live in households with aggregate income far above the poverty line.
D) The minimum wage causes an increase in the out of poverty escape rate.
E) Earning the minimum wage cannot give the worker enough income to put him above the poverty line.

Answer 2

C

Question 3

Which of the following is an accurate description of the Wessel's effect?

A) Working productivity is linearly related to educational attainment.
B) Firms may attempt to undo the effects of an increase in the minimum wage by reducing fringe benefits.
C) Hourly wages are equal to marginal productivity in a competitive environment.
D) The minimum wage will tend to increase employment in a monopsony environment.
E) Oligopoly conditions dampen the effect of a minimum wage.

Answer 3

B

Question 4

In a monopsony environment,an increase in the minimum wage ______ employment.

A) can increase or decrease
B) if the labor market is closed will increase
C) if the labor market is open will increase
D) will decrease
E) will not change

Question 5

When introduced in the United States,the minimum wage was set at ______ and covered about ______ of all workers.Today the federal minimum wage is ______ and it covers almost ______ of workers.

A) $0.25;50 percent;$4.25;50 percent
B) $1.00;75 percent;$10.25;50 percent
C) $0.50;100 percent;$7.25;90 percent
D) $0.50;75 percent;$7.25;90 percent
E) $0.25;50 percent;$5.25;90 percent

Question 6

The minimum wage was introduced in the United States as part of the:

A) Fair Labor Standards Act of 1938.
B) Social Security Act of 1952.
C) Equal Pay Act of 1963.
D) Civil Rights Act of 1964.
E) Oaxaca decomposition.

Question 7

In the competitive model where all workers are covered by the minimum wage and all firms comply with the law,a minimum wage set above the competitive equilibrium wage will ______ employment and ______ unemployment.

A) increase;increase
B) not affect;decrease
C) decrease;increase
D) decrease;decrease
E) not affect;increase

Question 8

In an economy with two distinct sectors,the imposition of a minimum wage above the competitive equilibrium wage in one of those sectors will:

A) reduce the demand for labor in the non-minimum-wage sector.
B) cause workers to move to the non-minimum-wage sector.
C) decrease the equilibrium wage in the minimum-wage sector.
D) increase unemployment in the non-minimum-wage sector.
E) decrease employment in the non-minimum-wage sector.

Question 9

Today the federal minimum wage is and it covers almost of workers.

A) 4.25;50 percent
B) 10.25;50 percent
C) 7.25;90 percent
D) 5.25;90 percent
E) 8.00;75 percent

Question 10

Which of the following is NOT a reason that the real value of the minimum wage fluctuates considerably over time?

A) Sporadic changes to the nominal minimum wage.
B) Inconsistent enforcement of minimum wage legislation.
C) Inflation.
D) The political difficulty with which changes in the minimum wage occur.
E) Changes in prices over time.

Question 11

Today,the federal minimum wage is set at $5.25,the minimum wage in California is set at $8.00,and the minimum wage in Ohio is $5.15.A worker covered by the minimum wage in California must be paid at least and a worker covered by the minimum wage in Ohio must be paid at least ______.

A) $8.00;$8.00
B) $8.00;$5.25
C) $8.00;$5.15
D) $5.25;$5.25
E) $5.25;$8.00

Question 12

The minimum wage was introduced in the United States as part of the ______ and excluded workers in the ______ sector.

A) Fair Labor Standards Act of 1938;agricultural
B) Equal Pay Act of 1963;retail
C) Fair Labor Standards Act of 1938;production
D) Equal Pay Act of 1963;retail
E) Equal Pay Act of 1963;agricultural

Question 13

In which type of market are all workers and firms price takers?

A) Oligopoly
B) Monopoly
C) Monopsony
D) Competitive
E) Monopolistic competition

Question 14

Card,Katz,and Krueger's minimum wage findings have come under close scrutiny since their publication.Recent studies have found ______ that in the minimum wage can ______ employment.

A) an increase;increase
B) an increase;decrease
C) a decrease;increase
D) a decrease;decrease
E) no change;decrease

Question 15

In an economy with two distinct sectors,the imposition of a minimum wage above the competitive equilibrium wage in one of those sectors will NOT:

A) reduce the demand for labor in the minimum-wage sector.
B) cause workers to move to the non-minimum-wage sector.
C) increase employment in the non-minimum-wage sector.
D) decrease employment in the minimum-wage sector.
E) increase unemployment in the non-minimum-wage sector.

Question 16

______ in the minimum wage could discourage schooling investments by making education ______ attractive relative to work.

A) An increase;more
B) An increase;less
C) A decrease;more
D) A decrease;less
E) There is no causal relationship between the minimum wage and education.

Question 17

In practice,the ______ of the minimum wage is usually ______.

A) coverage;incomplete
B) coverage;complete
C) enforcement;complete
D) effect;trivial
E) enforcement;trivial

Question 18

Card,Katz,and Krueger published a series of influential papers in the 1990s that found that ______ in the minimum wage can ______ employment.

A) an increase;increase
B) an increase;decrease
C) a decrease;increase
D) a decrease;decrease
E) no change;decrease