Assume that the government provides a cash transfer to each family regardless of their market earnings. Given this transfer, which of the following hypotheses about labor supply is correct?
a. Labor supply will increase because the income effect outweighs the substitution effect.
b. Labor supply will increase because leisure is an inferior good.
c. The income effect will reduce labor supply; there is no substitution effect.
d. Labor supply will be constant since wages are unaffected.
c
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At any point in time, a single bank can loan an amount equal to
A) its excess reserves. B) its required reserves. C) its government securities. D) the amount of loans the bank made in the past. E) its total reserves.
Discouraged workers are people who have:
A. not looked for work in over a year because of the condition of the labor market. B. not looked for work in the past year but would take a job if one was offered to them. C. looked for work in the past year but decided to leave the labor market to go back to school, retire, or be a stay-at-home parent. D. looked for work in the past year but have given up looking because of the condition of the labor market.