The Income and Substitution Effects of a Change in the Wage

question 81

Multiple Choice

The income and substitution effects of a change in the wage rate _____

• A)always work in the same direction.
• B)always work in opposite directions.
• C)work in opposite directions only if the wage decreases.
• D)work in the same direction only if the wage increases.
• E)work in the same direction only if the wage decreases.

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Definitions:

Category

A class or division of people or things regarded as having particular shared characteristics or properties.

Schema

A cognitive framework or concept that helps organize and interpret information, based on one's experiences and knowledge.

Impression

The initial perception or judgment formed about someone or something based on available information.

Misremember

The act of incorrectly recalling or reporting past events or information.