PT151 S2 Q24 ExplanationEconomist: If minimum wage levels

Answer choices, explained

1. A

   Correct72% picked this

   Productivity growth in a country usually leads to an eventual increase

   Why this is right

   Cool, we're learning about a good thing that would happen in a world with higher min wage. We were told that higher min wage leads to better productivity growth, and this answer adds on that better productivity growth will usually lead to more job creation. This makes us feel better about "the good outweighs the bad", since the bad was "some people will lose their jobs". This is saying, "Yes, initially ... but ultimately this move will create jobs, so we'll eventually get the boost without much or any of the detriment".

   Skill tested: Strengthen · how this choice captures the argument's function is the move to repeat next time.

   72%
2. B

   Opposite4% picked this

   The economist’s country has seen a slow but steady increase in its unemployment rate over

   This doesn't do much, because it's not pointing us to any comparative difference between a world in which we do / don't have a low minimum wage. But since it's saying that unemployment has already been rising for a decade, it sort of makes the detriment of raising the min wage (job losses) sound worse than before, because we'd be adding more job losses to an economy that has already seen growing unemployment for 10 years.

   4%
3. C

   Opposite11% picked this

   A country’s unemployment rate is a key factor in determining its

   If anything this feels like it goes against our author saying that "average living standards track closely to productivity levels". And it feels like if we raised our min wage, which would probably trigger layoffs, we would be increasing our unemployment rate, thereby lowering our average living standards.

   11%
4. D

   Out of Scope Comparison7% picked this

   The economist’s country currently lags behind other countries in the development

   It isn't relevant to this conclusion how this country compares to other countries. It's only relevant whether raising the min wage would make this country's new overall economic health comparatively better than this country's previous overall economic health.

   7%
5. E

   Opposite6% picked this

   Productivity-enhancing new technology tends to quickly

   The author is telling a story in which we raise the min wage, which then incentivizes companies to pursue productivity-enhancing technology. If that technology quickly becomes outdated, it sounds like our author's suggestion is nudging companies towards making an investment with a very short shelf life.

   6%