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Author Question: The government reduces the corporate profits tax. As a result, corporate profits increase. This will ... (Read 302 times)

mmm

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Question 1

Which of the following is 
not true of a change in dividend payments?


◦ There is no income effect because a change in dividend payments does not change a household's permanent income.
◦ There is no income effect because a change in dividend payments does not change the trade-off between work and leisure.
◦ There is no substitution effect because a change in dividend payments does not change a household's permanent income.
◦ All of these

Question 2

The government reduces the corporate profits tax. As a result, corporate profits increase. This will ________ the nonlabor income of households, causing consumption to ________ and labor supply to ________.


◦ decrease; decrease; increase
◦ decrease; decrease; decrease
◦ increase; increase; decrease
◦ increase; increase; increase


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Marked as best answer by mmm on Apr 19, 2019

cascooper22

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