When an individual's wage rises, the income effect tends to
a. increase hours worked.
b. decrease hours worked.
c. leave hours worked unchanged.
d. it is impossible to predict what will happen to hours worked.
b
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Adoption of a guaranteed annual income with benefits (B) given by B = 20,000 -.5 (earnings) would be expected to reduce work effort by low wage workers because:
a. the income effect would outweigh the substitution effect of the plan. b. the substitution effect would outweigh the income effect of the plan. c. both substitution and income effects would operate to reduce work effort. d. the plan would make working financially unattractive.
Unions
a. do not affect the natural rate of unemployment. b. lower the wages of unionized workers. c. raise the profits of unionized firms. d. lower the wages of workers in industries without unions.