Intertemporal Substitution of Labour Suggests That

question 14

Multiple Choice

Intertemporal substitution of labour suggests that

• A)in the short run, the substitution effect of an increase in the real wage does not outweigh the income effect.
• B)the substitution effect of a permanent increase in the real wages is equal to the substitution effect of a temporary change in the real wage.
• C)the substitution effect of a permanent increase in the real wages is larger than the substitution effect of a temporary change in the real wage.
• D)hours worked are not affected by changes in real wages.
• E)the substitution effect of a permanent increase in the real wages is smaller than the substitution effect of a temporary change in the real wage.

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