Assume that the substitution effect dominates the income effect. When wages fall
A. people will work more hours.
B. people will work fewer hours.
C. the effect on the hours people work is ambiguous.
D. people will work the same number of hours.
Answer: B
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According to your authors, market clearing
A) is planned by all buyers. B) is planned by all sellers. C) is planned by all buyers and sellers. D) is planned by economists and government agencies. E) is an unintended consequence of people pursuing their own plans.
If the price index in 2015 is 115 and the price index in 2016 is 102, the rate of inflation between 2015 and 2016 is
A. 13.0%. B. 12.7%. C. -11.3%. D. -13.0%.
When the price of a good rises, the resulting change in quantity demanded due solely to the decline in your income's purchasing power is called the
a. Giffen-good phenomenon. b. law of demand. c. substitution effect. d. income effect.
If there was a federal budget surplus it would make it possible to
A) decrease taxes in order to improve the equity and efficiency of the tax system. B) increase spending on priorities. C) reduce the national debt. D) any of the above.