A pure positive income shock leads to
A) an increase in leisure and consumption.
B) an increase in leisure and work.
C) an increase in work and consumption.
D) an increase in leisure and taxes.
A
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Suppose that the owner of a local ice cream store, knowing that demand for ice cream is higher when the weather is warmer, always charges a price in cents for a scoop of ice cream that is equal to two times the current outdoor temperature, measured in Fahrenheit (so that if it is 90 degrees outside, the ice cream is $1.80 per scoop). This type of behavior is ________.
A. exactly the type of behavior that Keynes believed most firms exhibit. B. free from menu costs. C. inconsistent with the key assumption upon which the basic Keynesian model is built. D. known as meeting demand.
The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power
A) income B) substitution C) ceteris paribus D) demographics
What do economists mean by rationality?
Which of the following is not considered a major player in the financial system?
A. Banks B. Savers C. Labor unions. D. Businesses