The Overall Effect of a Higher Real Wage Is

question 10

Multiple Choice

The overall effect of a higher real wage is:

• A)to increase labour as the income and substitution effect reinforce each other.
• B)ambiguous on labour as the income and substitution effect work against each other.
• C)to decrease labour as the income and substitution effect reinforce each other.
• D)ambiguous because the income and substitution effect reinforce each other.

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