In the Model Where G = QT, When Q Increases

question 8

Multiple Choice

In the model where G = qT, when q increases, the income effect

• A) increases both C and G.
• B) decreases G and increases C.
• C) reduces C and increases G.
• D) reduces both C and G.
• E) increases C and decreases G.

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Definitions:

Labor Supply Curve

A graphical representation that shows the relationship between the wage rate and the quantity of labor that workers are willing to supply.

Impose

To enforce or apply a rule, tax, penalty, or restriction.

Settlement

In financial terms, a settlement is the process whereby securities are delivered, usually against in exchange for payment of money, to fulfill contractual obligations, such as those arising from the sale of securities.

Wage Freeze

A policy or condition where an employer decides not to increase the wages of its employees for a certain period, often during economic downturns.