An Increase in G or G' Shifts the Output Supply

question 29

Multiple Choice

An increase in G or G' shifts the output supply curve to the right because

• A) lifetime wealth increases, a positive income effect that shifts labour supply to the right.
• B) lifetime wealth decreases, a negative income effect that shifts labour supply to the left.
• C) lifetime wealth decreases, a negative income effect that shifts labour supply to the right.
• D) the increase in the real interest rate shifts output supply.
• E) the decrease in the real interest rate shifts output supply.

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