Refer to Figure 14.1. The income effect of the wage increase on the amount of hours of leisure is:
A) L0 to L2.
B) L0 to L1.
C) L1 to L2.
D) L2 to L1.
E) none of the above
A
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A currency is undervalued if its exchange rate vis-à-vis a foreign currency is:
A) not pegged. B) at the equilibrium exchange rate. C) above the equilibrium exchange rate. D) below the equilibrium exchange rate.
Suppose people value clean air more as their incomes increase, then
A) the marginal cost curve of pollution abatement to shift left, increasing the degree of air quality. B) the marginal cost curve of pollution abatement to shift right, increasing the degree of air quality. C) the marginal benefit curve of pollution abatement to shift right, increasing the degree of air quality. D) the marginal benefit curve of pollution abatement to shift left, increasing the degree of air quality.