_____________ Represent Dollars Stated in Terms of Constant Purchasing Power

question 56

Multiple Choice

_____________ represent dollars stated in terms of constant purchasing power.

• A) Nominal dollars
• B) Real dollars
• C) Inflated dollars
• D) None of the above

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Definitions:

Labor Supply Curve

A graphical representation showing the relationship between the different levels of wages and the quantity of labor workers are willing to supply.

Income Effect

A person’s willingness to give up some income in exchange for more leisure time.

Substitution Effect

If the price of a resource, say labor, goes up, business firms tend to substitute capital or land for some of their now-expensive workers. Also, the substitution of more hours of work for leisure time as the wage rate rises.

Substitution Effect

The economic principle that as prices rise, consumers will replace costlier items with less expensive alternatives, holding the utility they receive constant.