On April 1, 2009, in the Middle of a Recession

Multiple Choice

On April 1, 2009, in the middle of a recession, the Government of Ontario increased the provincial minimum wage from $8.75 to $9.50. What would the likely effect of this policy be?

A) The higher wage will increase the supply of labour, offsetting the effects of the recession.
B) Low-income workers will be better able to survive the recession at the new, higher wage rate.
C) Both the leftward shift in the labour demand curve and the higher minimum wage will lead to an increase in the unemployment rate.
D) More people will be hired at the higher wage rate, offsetting the effects of the recession.