In order for there to be a backward-bending supply of labor curve, it must be the case that
A) at low wage rates, the income effect of a wage increase exceeds the substitution effect, but at high wage rates the substitution effect of a wage increase exceeds the income effect.
B) at low wage rates, the substitution effect of a wage increase exceeds the income effect, but at high wage rates the income effect of a wage increase exceeds the substitution effect.
C) the income effect of a wage increase exceeds the substitution effect at all wage rates.
D) the substitution effect of a wage increase exceeds the income effect at all wage rates.
B
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Suppose that the due to technological innovations, the absolute price of a recordable CD declines by 25% while the absolute price of a recordable cassette tape declines by 10%. In this situation, the price of the CD relative to the price of a tape
a. falls. b. rises. c. remains the same. d. changes unpredictably.
All else held constant, increased U.S. exports to nations in the European Union create a ________.
A. demand for euros B. shortage of euros C. supply of euros D. surplus of euros
Which of the following will create the largest increase in the money supply?
A. the Federal Reserve sells bonds and the banks choose to hold more excess reserves B. the Federal Reserve buys bonds and the banks choose to hold less excess reserves C. the Federal Reserve buys bonds and the banks choose to hold more excess reserves D. the Federal Reserve sells bonds and the banks choose to hold less excess reserves
When leisure is an inferior good, the wage elasticity of labor supply is always positive.
Answer the following statement true (T) or false (F)