Which of the Following Statements Is True

question 133

Multiple Choice

Which of the following statements is true?

• A)As the wage rate rises, the substitution effect decreases the opportunity cost of leisure and causes a worker to devote more time to working and less time to leisure.
• B)As the wage rate rises, the substitution effect increases the opportunity cost of leisure and causes a worker to devote more time to working and less time to leisure.
• C)As the wage rate rises, the income effect increases the opportunity cost of leisure and causes a worker to devote more time to working and less time to leisure.
• D)As the wage rate rises, the income effect causes a worker to devote more time to work and less time to leisure.

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Definitions:

Income Side

The aspect of national accounts that deals with how income is generated, distributed, and used in an economy, typically measuring aspects like wages, rents, and profits.

Aggregate Income

The total income earned by all individuals and entities in an economy over a specific time period.

Final Output

The total value of goods and services produced by an economy after adjusting for intermediate goods used in production, representing the end products available for consumption, investment, exports, and government spending.

Aggregate Expenditure

The total spending on goods and services in an economy during a specific period, including consumer spending, investment, government spending, and net exports.