With an increase in government purchases financed by an increase in the marginal tax rate on labor income, the change in labor supply depends on whether the:
a. negative substitution effect is bigger than the positive income effect.
b. positive substitution effect is bigger than the negative income effect.
c. negative substitution effect is bigger than the negative income effect.
d. positive substitution effect is bigger than the positive income effect.
Answer: a. negative substitution effect is bigger than the positive income effect.
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According to your text, controversies about negative externalities are almost always conflicts between the legitimate expectations of citizens and the
A) desire of individuals for greater profits. B) desire of politicians to be reelected. C) legitimate expectations of other citizens. D) mindless urge for more material goods. E) strident demands of environmentalists.
According to Gresham's Law:
a. money with relatively high intrinsic value will be used for transactions. b. money with relatively low intrinsic value will be used for transactions. c. money with relatively high intrinsic value will cause inflation. d. money with relatively low intrinsic value will cause inflation. e. inflation increases the intrinsic value of money.
Which one of the following is not a condition for a successful water market?
a. Property rights must be clearly defined b. A system must be in place to resolve conflicts c. Transaction costs must be relatively high d. Water demand must exceed water supply e. Water must be physically transferable
The more _____ the demand, _______.
Fill in the blank(s) with the appropriate word(s).