chapter_9_long

B downward sloping because the marginal product of

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Unformatted text preview: s with the quantity of labour employed. C) upward sloping because the marginal product of labour rises with the quantity of labour employed. D) upward sloping because the marginal product of labour declines with the quantity of labour employed. E) downward sloping because the marginal product of labour rises with the quantity of labour employed. 31) 5 32) In response to a permanent increase in government spending, the permanent income hypothesis would suggest that, to a first approximation, consumption demand should A) be unaffected. B) fall exactly as much as the increase in government spending. C) fall by less than the increase in government spending. D) fall by more than the increase in government spending. E) increase exactly as much as the increase in government spending. 32) 33) Any increase in the present value of taxes for the consumer implies A) a decrease in lifetime wealth and an increase in current labour supply. B) a decrease in lifetime wealth and a decrease in current consumption...
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