Assume That the Substitution Effect Dominates the Income Effect

question 78

Multiple Choice

Assume that the substitution effect dominates the income effect. When the government raises tax rates, after-tax real wage rates

• A) fall, consumption decreases, and labor supply increases.
• B) fall, consumption decreases, and labor supply decreases.
• C) rise, consumption increases, and labor supply increases.
• D) fall, consumption increases, and labor supply decreases.

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Definitions:

Self-esteem

One's overall evaluation or appraisal of one's own worth.

Competence

Refers to having the necessary ability, knowledge, or skill to perform a task successfully.

Meaning

The significance, purpose, or value that an individual assigns to an experience, concept, or aspect of their life.

Discipline

Discipline refers to the practice of training oneself or others to follow rules or a code of behavior, using punishment to correct disobedience, or the controlled behavior resulting from such training.