For a typical person who is currently earning a low wage rate, the
a. substitution effect of a wage rate increase usually is stronger than the income effect
b. substitution effect of a wage rate increase usually is weaker than the income effect
c. income effect of a wage rate increase is usually zero
d. substitution effect of a wage rate increase is usually zero
e. substitution and income effects of a wage rate increase tend to work in the same direction
A
You might also like to view...
Explain briefly PPP and IRP. Why might the latter hold better than the former over time?
What will be an ideal response?
Airline deregulation led to the demise of many smaller airlines but large carriers were not materially affected
a. True b. False Indicate whether the statement is true or false
International trade
A. raises the standard of living in all trading countries. B. lowers the standard of living in all trading countries. C. leaves the standard of living unchanged. D. raises the standard of living for importing countries and lowers it for exporting countries.
All other factors being constant, a reduction in price tends to cause which of the following?
A) an increase in supply and an increase in demand B) a reduction in supply and an increase in demand C) an increase in quantity supplied and a reduction in quantity demanded D) a reduction in quantity supplied and an increase in quantity demanded