Question

10. On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the
provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be?
A. Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the
unemployment rate.
B. Low income workers will be better able to survive the recession at the new, higher wage rate.
C. More people will be hired at the higher wage rate offsetting the effects of the recession,
D. The higher wage will increase the supply of labor offsetting the effects of the recession
explain

Answer 1

What will the likely effect of this policy be?

A) Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.

Because the employers will be willing to appoint more employees.