If an Individual's Wage Increases,it Is Theoretically Ambiguous If the Individual

question 15

Multiple Choice

If an individual's wage increases,it is theoretically ambiguous if the individual will work more or less.Why?

• A) The wealth effect will decrease the number of hours worked,but no one knows the direction of the substitution effect.
• B) The wealth effect has an ambiguous effect on the number of hours worked,but the substitution effect will increase the number of hours worked.
• C) Both the wealth effect and substitution effect have an ambiguous effect on earnings.
• D) The wealth effect will increase the number of hours worked,but the
• Substitution effect will decrease the number of hours worked.
• E) The wealth effect will decrease the number of hours worked,but the
• Substitution effect will increase the number of hours worked.

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Definitions:

Nominal

Referring to data classified into categories without a natural order or ranking among the categories.

Interval Data

A type of data that consists of numerical scores that exist on a scale with equal intervals between values but no true zero point.

Nominal Data

Categorical data that cannot be ordered or ranked in a meaningful way.

Ordinal Data

A type of categorical data with a set order or scale, but without a standard spacing between the categories.