If the income effect is ________ the substitution effect, the labor supply curve has a positive slope.
A. smaller than
B. equal to
C. unrelated to
D. greater than
Answer: A
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In the late 19th century, interest rates in the U.S.:
a. tended to remain relatively constant throughout the year. b. tended to increase in the summer and decrease in the winter. c. tended to increase in the fall and winter, and decrease in the spring and summer. d. tended to rise steadily from winter through summer, and then decrease in the fall.
Keynes once remarked that, in the long run, we're all dead. He was responding to the conventional wisdom of classical economics, which argued that
a. the aggregate supply curve is vertical in the long run b. the aggregate supply curve is horizontal in the long run c. an economy out of equilibrium was only a short-run, temporary departure from full-employment equilibrium d. we must save for the future e. consumption will run out in the long run
The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good
a. True b. False Indicate whether the statement is true or false
The LM curve has a
A. positive slope because a higher interest rate leads to a higher incentive to hold money and thus a higher money supply is needed for equilibrium. B. negative slope because a lower interest rate leads to an increase in the demand for bonds and thus a higher level of domestic production is needed to cause people to continue to hold the same amount of money. C. positive slope because a higher interest rate leads to a decrease in the demand for money and thus a higher level of domestic production is needed to cause people to continue to hold the same amount of money. D. negative slope because a lower interest rate leads to a decrease in foreign investments and thus a higher level of domestic production is needed for equilibrium.