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The nominal minimum wage is set by governments. The real minimum wage
is the real value of the nominal minimum wage. It is determined by dividing the
nominal minimum wage by the price level.
The levels of the real wage and employment are determined by labor market
equilibrium.

ASSIGNMENTS

Choose the correct answer.
1 The existence of discouraged workers may present a problem in determining
the actual _____ rate.
a) unemployment;
b) income tax;
c) sales tax;
d) revenue.

2 Assess which of the following would be qualified as “unemployed”:
a) a manufacturing worker whose factory just closed down;
b) a husband willingly stays home with children while his wife works;
c) someone who has been out of work for two months but isn’t looking for a
job;
d) a retiree.

3 Who would be included in the labor force?
a) someone, who does not have a job, but is looking for work;
b) an unpaid homemaker;
c) a full-time student, who is not looking for work;
d) none of the above are included in the labor force.

4 Assess which of the following would be considered as “out of the labor
force”:
a) a husband willingly stays home with children while his wife works;
b) someone who has been out of work for two years but keeps looking for a
job;
c) someone who decides to take a part time job because she could not find a
full time position;
d) someone who hates her present job and is actively looking for another one.

5 What type of the following applies to frictional unemployment?
a) a financial analyst who quits his/her job in Chicago and is pursing similar
work in Arizona;
b) coal miners laid off due to EPA regulations that shut down coal fired power;
c) landscapers laid off in response to drop in new housing construction during a
recession;
d) printers laid off due to drop in demand for printed catalogues and flyers as
firms go the internet to promote an advertise their products.

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