A higher minimum wage will cause a surplus of workers, leading to ____________.

1. division of labor
2. specialization
3. unemployment
4. a higher equilibrium wage
5. increased labor demand

Which of the following events will most likely increase the interest rate in the market for credit cards?

1. an increase in the supply of credit with no change in demand
2. an increase in the supply of credit at the same time that the demand for credit cards declines
3. a decrease in the supply of credit at the same time that the demand for credit cards increases
4. a decrease in both the supply of credit and the demand for credit
5. no change in the supply of credit and a decrease in the demand for credit

Draw a demand and supply curve for financial capital in Country A and analyze the effects of the following events on the equilibrium interest rate and quantity of capital. For each event, explain whether the equilibrium interest rate and quantity of capital increases or decreases or whether there becomes a surplus or shortage.

1. an aging population lowers the savings rate in Country A
2. an influx of foreign capital into Country A
3. an increase in investment opportunities in Country A
4. an effective usury law in Country A keeps interest rates low
5. diminished confidence in Country A’s economy