When Wages Increase,the Substitution Effect Implies That Employment Will ________

question 8

Multiple Choice

When wages increase,the substitution effect implies that employment will ________ and the scale effect implies that employment will ________.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

Maturity Date

The specified date when the principal amount of a loan, bond, or other financial instrument is due to be paid in full.

Time Value of Money

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Equivalent Payment

A term often used in finance to indicate a payment that has the same value or purchasing power as another, possibly under different conditions or payment schedules.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to assess price changes associated with the cost of living.