If an Individual's Supply of Labor Curve Is "Backward Bending

question 19

Multiple Choice

If an individual's supply of labor curve is "backward bending," (that is,labor supply falls at high wage rates) then:

• A)the substitution effect always dominates the income effect.
• B)the income effect always dominates the substitution effect.
• C)the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels.
• D)the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.

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Definitions:

Social Security

A governmental program designed to provide financial assistance to elderly, disabled, and survivors through retirement benefits, disability insurance, and other means.

Americans Working

The portion of the U.S. population engaged in employment, reflecting the labor force's health and economic activity levels.

Depression

An extended period of significant economic downturn, characterized by a substantial decrease in economic activity, high unemployment, and deflation.

New Deal

A collection of initiatives, including public projects, economic reforms, and regulations, implemented in the United States by President Franklin D. Roosevelt in the 1930s, aimed at aiding the recovery from the Great Depression.