The general equilibrium analysis of a minimum wage applied to only some sectors of the economy suggests that
A) workers in all sectors will face increased wages.
B) some workers in the covered sectors will lose their jobs and remain unemployed.
C) some workers originally employed in the covered sectors will move to the uncovered sectors, driving down wages in the uncovered sectors.
D) all workers will be worse off.
C
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Suppose the price level is fixed, the MPC is .8, and the GDP gap is a negative $200 billion. To achieve full-employment output (exactly), government should:
A. increase government expenditures by $200 billion. B. reduce taxes by $200 billion. C. increase government expenditures by $40 billion. D. reduce taxes by $160 billion.
If the benefits from an antipoverty program are phased out as an individual's income increases, the program will
a. cost the government more than a program that benefits everyone. b. increase the effective marginal tax rate that the poor face. c. encourage greater work effort from the poor. d. lead to an excess supply of labor among unskilled workers.