Suppose That During an Economic Boom,workers Get Higher Wages

question 43

Multiple Choice

Suppose that during an economic boom,workers get higher wages.They do not expect the boom to last,and expect wages to return to their usual level.As a result,during the boom (compared to usual times) ,

• A) they are likely to want to work more hours.
• B) they are likely to work less hours.
• C) they are likely to work the same hours as usual.
• D) the answer is uncertain: it depends on which is stronger, the income or substitution effect.

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