Promising the Moon Essay Economic Paper
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Promising the Moon Essay Economic Paper
* Writing Format: 400~500 words, double spaced!
Please read the attached article, “Minimum Wage – Promising the Moon” from The Economist, and submit your written response to the following question.
Question: Do you agree, disagree, or uncertain to South Korean government’s claims that raising minimum wage will help stronger consumption and economic growth? Provide evidence and/or economic analysis using demand and supply models (especially in the labor market) to support or oppose her claims. Specifically answer the following questions, applying the assumptions listed below.
Assumption 1) Minimum wage is binding. (i.e., minimum wage is above market equilibrium level.
Assumption 2) Minimum wage mostly affects low income earners, and they tend to spend more when their income rises.
Question 1) What does the demand and supply model predict about the change in labor demand quantity? Compare your answers given the following two cases:
case 1) Labor demand is perfectly inelastic
case 2) Labor demand is elastic
Question 2) Given your answers to question 1), would minimum wage rise lead to increase in unemployment rate? How about overall consumption level? In the long run, do you expect that minimum rate increase will help boost economic growth?
Promising the Moon Essay Economic Paper
* Writing Format: 400~500 words, double spaced!
Please read the attached article, “Minimum Wage – Promising the Moon” from The Economist, and submit your written response to the following question.
Question: Do you agree, disagree, or uncertain to South Korean government’s claims that raising minimum wage will help stronger consumption and economic growth? Provide evidence and/or economic analysis using demand and supply models (especially in the labor market) to support or oppose her claims. Specifically answer the following questions, applying the assumptions listed below.
Assumption 1) Minimum wage is binding. (i.e., minimum wage is above market equilibrium level.
Assumption 2) Minimum wage mostly affects low income earners, and they tend to spend more when their income rises.
Question 1) What does the demand and supply model predict about the change in labor demand quantity? Compare your answers given the following two cases:
case 1) Labor demand is perfectly inelastic
case 2) Labor demand is elastic
Question 2) Given your answers to question 1), would minimum wage rise lead to increase in unemployment rate? How about overall consumption level? In the long run, do you expect that minimum rate increase will help boost economic growth? Promising the Moon Essay Economic Paper
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