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JAMB Economics 1981 Question 45

Question 45

Labour Market

One of the probable effects of an increased minimum wage in Nigeria is

  1. A.to create voluntary unemployment
  2. B.to decrease the wage rate
  3. C.to increase the level of employment
  4. D.to create involuntary unemployment
  5. E.to increase the demand for labour.
Show the answer and explanation

Answer: D (to create involuntary unemployment)

Explanation

A minimum wage above the market wage makes employers hire fewer workers, so some who want jobs cannot find them.