Comment on the following statement: "An increase in the wage always leads to an increase in the quantity of labor supplied."
What will be an ideal response?
The statement is false. If the substitution effect is larger than the income effect, a wage increase will lead to an increase in the quantity of labor supplied. However, if the income effect is larger, an increase in the wage will actually lead to a decline in the quantity of labor supplied.
Economics
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If the CPI basket of goods cost $200 in the reference base period and $450 in a later year, the CPI in the later year equals
A) 225. B) 250. C) 300. D) 450.
Economics
The excess of the nominal interest rate over the TIPS interest rate is known as the
A. yield spread. B. interest-rate differential. C. break-even inflation rate. D. term structure.
Economics