Homework 3 - paper

Homework 3 - paper - Econ 201 Dr. Elliot October 1, 2009...

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Econ 201 Dr. Elliot October 1, 2009 Homework 3 After analyzing the legislation that Congress has proposed, it would be advisable and in the best interest for the US Chamber of Commerce to reject the legislation. Currently, the labor market in the US is in equilibrium at a wage of $7.35/hour. Congress has recommended raising minimum wage to $9.85/hour. It is my belief that raising the minimum wage would ultimately cause a rise in inflation, a rise in the level of prices of goods and services in an economy. This would be due to the fact that an increase in minimum wage would result in consumers having more money. Inflation would then lead to a rise in the production of normal goods, goods where demand increases as income increases. Another possible consequence would be unemployment. Unemployment would be on the rise, if Congress were to raise the minimum wage, because companies would be faced with the issue of laying off employees in order to afford the higher wages. In addition, companies may decide to use offshoring and/or outsourcing.
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This note was uploaded on 03/21/2012 for the course ECO 201 taught by Professor Dunlevy during the Spring '08 term at Miami University.

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