chapter_9_long

C decrease current labour supply and decrease current

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Unformatted text preview: ecrease current consumption demand. D) decrease current labour supply and decrease current leisure. E) increase current labour supply and decrease current consumption demand. 19) 20) The assumption that current - period labour supply is positively related to the current - period real wage is justified as long as the A) substitution effect equals the income effect in the long run. B) substitution effect dominates the income effect in the short run. C) income effect dominates the substitution effect in the long run. D) income effect dominates the substitution effect in the short run. E) substitution effect dominates the income effect in the long run. 20) 21) When drawn against the real interest rate, the output supply curve unambiguously shifts to the right if either or both of the following occur. A) a decrease in current government spending and an increase in future government spending B) an increase in current government spending and a decrease in future government spending C) an increase in current government spending and an increase in future government spending D) a decrease in current government spending and a decrease in future government spending E) a decrease in current government spending and an increase in the real interest rate 21) 22) The equilibrium effects of a temporary increase in government spending include A) real wages and the real interest rate remaining unchanged. B) an increase in the real wage and an increa...
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