The Substitution Effect of a Wage Increase

question 186

Multiple Choice

The substitution effect of a wage increase

• A)probably leads most workers to want to work more.
• B)certainly leads all workers to want to work more.
• C)probably leads most workers to want to work less.
• D)certainly leads most firms to want to employ more workers.

---

Definitions:

Excise Taxes

Taxes paid on specific goods and services, such as tobacco and fuel, intended to raise revenue and discourage consumption of these items.

Progressive

relates to a taxation system where the tax rate increases as the taxable base amount increases, often aimed at redistributing income to achieve a more equitable society.

Corporate Income Tax

A tax imposed on the net income of corporations, calculated on the basis of the business's profit, contributing to government revenues.

Defense Spending

Expenditures by a government on military and defense-related activities to maintain national security.