Which of the following statements is true, assuming leisure is a normal good?
A. If the income effect is sufficiently large, the labor supply curve will bend backwards.
B. If the income effect is sufficiently small, the labor supply curve will bend backwards.
C. If the income effect is sufficiently large, the labor supply curve will slope down.
D. If the income effect is sufficiently large, the labor supply curve will shift to the left.
A. If the income effect is sufficiently large, the labor supply curve will bend backwards.
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The small but non-trivial costs that a firms incurs when changes product prices are also called
A) menu costs. B) price inertia. C) sticky costs. D) sunk costs.
According to the Quantity Theory of Money (Chapter 3), the increase in the money supply from $39.7 billion in 1940 to $99.2 billion in 1945 should have fueled strong inflation. However, it did not because
(a) the World War II (1941–45) (WWII) economy was operating below full employment levels of production. (b) the WWII economy was operating at full employment levels of production. (c) the WWII economy was operating above full employment levels of production. (d) price controls prevented the surge in prices across the economy.
According to the permanent income hypothesis, taxpayers react to a one-time tax rebate
A) by spending all of the tax rebate. B) by spending more than the amount of the tax rebate. C) by saving half of the tax rebate and spending the rest. D) by saving all of the tax rebate.
Lincoln Electric paid employees on the basis of
A) deferred compensation. B) backloaded wages. C) a piece rate. D) forward loaded wages.