If the Wage Rate Increases,the Substitution Effect Gives a Household

question 3

Multiple Choice

If the wage rate increases,the substitution 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:

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A psychological concept referring to the belief that outside forces, rather than personal actions, control one’s life outcomes.

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A condition in which a person suffers from a sense of powerlessness, arising from traumatic events or persistent failure.