Can someone help me out with this multiple choice question in AP Macro?
"Congress votes to substantially increase the minimum wage. The determinant causing the shift in this scenario is:
A. price
B. productivity
C. resource cost
D. political or environmental phenomena
E. consumer spending
F. investment
G. net exports
H. government spending"
There isn't anything in my notes about changes in wage so I could really use some assistance and explanation if at all possible. Thanks ahead of time!!
What does government spending have to do with McDonald's raising the wages of its employees?
When government sets wages or prices, it has little to do with economics, much more to do with politics, or cultural practices.
Of course, I'd be happy to help you with that multiple-choice question!
To determine the correct answer, we need to understand the underlying determinant behind Congress's decision to substantially increase the minimum wage. Let's break down the options one by one:
A. Price: The minimum wage increase affects wages, not prices. We can eliminate this option.
B. Productivity: Though productivity is an important factor in determining wages, it is not directly related to Congress's decision in this scenario. We can eliminate this option as well.
C. Resource cost: An increase in the minimum wage directly affects the cost of labor resources. This option is a strong possibility.
D. Political or environmental phenomena: While political factors can influence decisions, this option is too broad and does not specifically address the minimum wage increase. We can eliminate this choice.
E. Consumer spending: Although a minimum wage increase can indirectly boost consumer spending, this is not the primary determinant in this scenario.
F. Investment: While a minimum wage increase may impact investment decisions indirectly, it is not the primary determinant here.
G. Net exports: Net exports refer to the difference between a country's exports and imports. This option doesn't directly relate to the increase in the minimum wage, so we can eliminate it.
H. Government spending: The minimum wage increase is a government policy decision, and it directly affects government spending. This option is a strong possibility.
Based on this analysis, the best answer is either C (resource cost) or H (government spending). It ultimately depends on how the question is framed and the context. If the question asks for the most direct determinant, H (government spending) is the better option. However, if the question emphasizes the cost aspect, C (resource cost) might be the preferable choice.
Remember to review your class materials and consider the specific focus of the question to make the best selection.