In which of the following scenarios would the income effect be most likely to be greater than the substitution effect?
A. An increase in the minimum wage
B. A tax on fast foods
C. An increase in salaries for surgeons
D. An increase in wages for day laborers
Answer: C
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An example of an automatic stabilizer is
A) unemployment compensation. B) a newly enacted surtax to slow down an overheated economy. C) a horizontal aggregate supply curve. D) a change in the marginal tax rates.
The chair of the Board of Governors of the Fed is appointed by the president
a. True b. False Indicate whether the statement is true or false
Exclusions from GDP measurement of such items as the value of housework and leisure seriously undermine the usefulness of GDP as an indicator of the economy's performance
Indicate whether the statement is true or false
Other things the same, when the price level rises, interest rates
a. rise, so firms increase investment. b. rise, so firms decrease investment. c. fall, so firms increase investment. d. fall, so firms decrease investment.