If the Wage Rate Decreases,the Income Effect Gives a Household

question 94

Multiple Choice

If the wage rate decreases,the income effect gives a household the incentive to

• A)raise its reservation wage.
• B)increase leisure and decrease work.
• C)increase work and decrease leisure.
• D)increase both work and leisure.
• E)decrease both work and leisure.

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Definitions:

Depreciation

The process of allocating the cost of a tangible asset over its useful lifespan, representing wear and tear, deterioration, or obsolescence.

Section 1250

Section 1250 of the U.S. Internal Revenue Code deals with the tax treatment of gains from the sale of depreciable real property, distinguishing between ordinary income and capital gains.

Short-term Loss

A financial loss realized on the sale or exchange of an asset held for one year or less.

Accumulated Straight-line Depreciation

The total amount of depreciation expense that has been recorded for an asset to date, using the straight-line method of depreciation.