The Income Effect of a Decrease in the Wage Rate

question 56

Multiple Choice

The income effect of a decrease in the wage rate causes the quantity of labor supplied to _____

• A)always increase.
• B)increase only if the individual desires more leisure time.
• C)increase only if the substitution effect outweighs the income effect.
• D)always decrease.
• E)decrease only if the substitution effect is weaker than the income effect.

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Definitions:

Mergers And Acquisitions

The process of consolidating companies or assets, where 'mergers' is the combination of companies and 'acquisitions' is one company taking over another.

Effective

Achieving desired outcomes or goals with the least waste of time and effort; efficiency in action or use.

Excise Tax

A tax charged on specific goods and services, such as alcohol, tobacco, and fuel.

Government Revenue

The income received by the government from taxes, non-tax sources, and other fiscal policies.