PrepTest 89, Section 2, Question 24
Economist: The increase in the minimum wage in Country X will quickly lead to a decrease in Country X's rate of unemployment. Raising the minimum wage will lead to more disposable income for a large segment of the working population. Much of this increased income will be spent on consumer goods. Surely this increase in demand for consumer goods will lead to an increase in the number of factory jobs necessary to meet production.
Economist: The increase in the minimum wage in Country X will quickly lead to a decrease in Country X's rate of unemployment. Raising the minimum wage will lead to more disposable income for a large segment of the working population. Much of this increased income will be spent on consumer goods. Surely this increase in demand for consumer goods will lead to an increase in the number of factory jobs necessary to meet production.
Economist: The increase in the minimum wage in Country X will quickly lead to a decrease in Country X's rate of unemployment. Raising the minimum wage will lead to more disposable income for a large segment of the working population. Much of this increased income will be spent on consumer goods. Surely this increase in demand for consumer goods will lead to an increase in the number of factory jobs necessary to meet production.
Economist: The increase in the minimum wage in Country X will quickly lead to a decrease in Country X's rate of unemployment. Raising the minimum wage will lead to more disposable income for a large segment of the working population. Much of this increased income will be spent on consumer goods. Surely this increase in demand for consumer goods will lead to an increase in the number of factory jobs necessary to meet production.
Each of the following, if true, would weaken the economist's argument except:
The cost of a minimum-wage increase in Country X will be passed on to consumers in the form of significantly higher prices for consumer goods.
Most of the consumer goods sold in Country X are produced outside the country.
In many factories in Country X, most workers are paid much more than the current minimum wage.
The cost to employers of an increase in the minimum wage in Country X will be made up by reductions in the workforce.
Most factories that produce consumer goods in Country X have large surpluses of goods as a result of years of overproduction.
Explanations
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