Why Does a Temporary Increase in Government Purchases Increase Labour

question 40

Multiple Choice

Why does a temporary increase in government purchases increase labour supply in the classical model?

• A)The rise in government spending increases labour demand,increasing the real wage,and so people increase their labour supply.
• B)Increased government purchases make people better off,so they work more hours.
• C)The increase in current or future taxes needed to pay for the increase in government purchases reduces people's wealth.
• D)People prefer to work harder when the government is doing more for them.

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Definitions:

Erogenous Zones

Erogenous zones are areas of the body that elicit sexual arousal when touched or stimulated.

Sigmund Freud

An Austrian neurologist who founded the discipline of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Superego

A part of the human psyche in psychoanalytic theory that represents internalized ideals and provides standards for judgment.

Id

Within the framework of psychoanalytic theory, it refers to the segment of the mind responsible for generating innate impulses and urging the instant gratification of basic desires.