The income effect of a higher real wage on the quantity of labor supply is the
A) idea that workers feel psychologically wealthier when wages are higher, so they work more.
B) effect that income must rise when wages rise.
C) tendency of workers to supply more labor in response to becoming wealthier.
D) tendency of workers to supply less labor in response to becoming wealthier.
D
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Because the actual market-capitalist system is a combination of market processes and political processes,
A) it can only be managed appropriately by well-trained political economists. B) it is often unclear where to place the blame when things go wrong. C) political considerations will always ruin the market process. D) economic considerations will always ruin the political process.
If an investment requires payment of $10,000 now and promises to return a payout of $15,000 one year from now and another payout of $15,000 two years from now, the net present value of the investment at an interest rate of 8% is approximately
A. $11,749. B. $5,000. C. $16,749. D. $26,749.