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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Definitions:

Bankrupt

Describes a legal status of a person or entity that cannot repay the debts it owes to creditors, leading to legal proceedings for debt relief.

Liabilities

Financial obligations or debts that a person or entity legally owes to others.

Stigma

A negative perception or association with a property or individual, often due to psychological factors or past events, which can affect value or reputation.

Installments

Payments divided into multiple, usually regular, parts over a set period of time.