In Which of the Following Situations Will an Individual's Purchasing

question 63

Multiple Choice

In which of the following situations will an individual's purchasing power be unaffected?

• A)money income doubles and the prices of all goods and services are cut in half
• B)money income remains constant and the prices of all goods and services double
• C)money income is cut in half and the prices of all goods and services double
• D)money income is cut in half and the prices of all goods and services remains constant
• E)money income doubles and the prices of all goods and services double

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Definitions:

Efficiency Wages

Efficiency wages are higher than market wages paid by employers to increase productivity, worker loyalty, and morale.

Above-Equilibrium Wage Rates

Wages set above the market equilibrium, often leading to surplus labor supply or unemployment, as employers demand less labor at higher wage rates.

Opportunity Cost of Shirking

The benefits a worker forgoes by choosing to shirk (reduce their level of effort or productivity) at work, which could include potential wage increases, promotions, or job security.

Shirking

The action of avoiding or escaping from work or duties.