The Average Work Week in the United States Has Declined

question 80

Multiple Choice

The average work week in the United States has declined to fewer than 40 hours even though wage rates have been increasing.The best explanation of this phenomenon is that

• A)the labor supply curve shifted to the right
• B)the labor demand curve shifted to the right
• C)the income effect of rising wages outweighed the substitution effect
• D)the income effect of rising wages could not outweigh the substitution effect
• E)none of the above

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Definitions:

Compound Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Cash Payback Period

The length of time required for an investment to generate cash flows sufficient to recover the initial outlay.

Present Value Factors

The numerical values used to calculate the present value of future cash flows, based on a specific discount rate.

Desired Rate of Return

The minimum rate of return on an investment that an investor considers acceptable, given its risk and alternative options.