Refer to Figure 20-1. Based on the graph of the labor market above, if a minimum wage is set at 5 per hour, which of the following will occur?
A) The level of unemployment will rise, but the percentage of the labor force unemployed will not change.
B) The unemployment rate will fall.
C) The unemployment rate will rise.
D) None of the above will occur.
Question 2
Using the money demand and money supply model, an open market sale of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to
A) not change. B) increase, then decrease.
C) increase. D) decrease.
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