Fiona's hourly wage increases from $8 to $10 . Which of the following describes a consequence of the increase in Fiona's wage?
a. The opportunity cost of Fiona's leisure time has decreased.
b. Fiona may choose to work fewer hours due to the increase in her wage.
c. If Fiona's labor supply curve is upward sloping, she will choose to work fewer hours.
d. Both a and b are correct.
b
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A currency depreciation
A. reduces aggregate demand and increases aggregate supply. B. reduces aggregate demand and aggregate supply. C. increases aggregate demand and reduces aggregate supply. D. increases aggregate demand and aggregate supply.
Consider a nation that has a comparative advantage in the production of goods using unskilled labor. What types of workers will benefit from increased trade, and what type will lose?
What will be an ideal response?
If credit card usage exhibits a sharp increase, there is
A) an upward movement along the demand for money curve. B) a rightward shift of the demand for money curve. C) a leftward shift of the demand for money curve. D) a downward movement along the demand for money curve. E) a leftward shift of the supply of money curve.
Your drink budget is entirely split between bottled water and fancy liqueurs, and your tastes are quasilinear in bottled water. In an attempt to get people to drink more water, the government introduces a subsidy that lowers the price of bottled water.
a. In a graph with bottled water on the horizontal and fancy liqueurs on the vertical axis, illustrate your before-subsidy budget and your optimal bundle A. b. As a result of the water subsidy, I notice you consume more fancy liqueur. Illustrate this in your graph using income and substitution effects. c. You and I are good friends, in part because I confided in you some time ago that I, too, have tastes that are quasilinear in water. (Nothing bonds like quasilinearity!) But, after the subsidy is introduced, you observe that I, unlike you, have reduced my consumption of fancy liqueurs. Your other friends claim that this is proof that our friendship is based on a fiction --- that I cannot possibly also have quasilinear tastes. Illustrate in a graph why your friends are wrong. d. If we both have quasilinear tastes, can you explain what the fundamental difference in our tastes is that accounts for the difference in behavior? What will be an ideal response?