Some suggest that many New York taxi drivers set an income goal for the week and finish work once they have achieved that goal. Since the effective hourly wage is higher on busy days, choosing to stop working when a particular income goal is reached is:
A. consistent with an upward-sloping labor supply curve since the quantity of labor supplied is higher when the wage is higher.
B. consistent with an upward-sloping labor supply curve since the quantity of labor supplied is lower when the wage is higher.
C. inconsistent with an upward-sloping labor supply curve since the quantity of labor supplied is higher when the wage is higher.
D. inconsistent with an upward-sloping labor supply curve since the quantity of labor supplied is lower when the wage is higher.
Answer: D
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A decrease in consumer wealth will
A) not change autonomous consumption and rotate the consumption function upward. B) decrease autonomous consumption and shift the consumption function downward. C) not change autonomous consumption and rotate the consumption function downward. D) increase autonomous consumption and shift the consumption function upward.
To the extent that households are target savers who save to reach a specific goal, an increase in the interest rate ________ household saving and a decrease in the interest rate ________ household saving.
A. increases; decreases B. does not affect; increases C. increases; does not affect D. decreases; increases