Author Question: When the wage increases, the substitution effect in the household's choices leads to A) a ... (Read 156 times)

humphriesbr@me.com · **on:** Jun 30, 2018

When the wage increases, the substitution effect in the household's choices leads to

A) a decrease in consumption and leisure.
B) a decrease in consumption and an increase in leisure.
C) an increase in consumption and a decrease in leisure.
D) an increase in consumption and leisure.

Question 2

According to Keynes, the consumption-income relationship is shown as C = a + bYD. Therefore, the saving-income relationship is

a. S = a + (1 b)YD.
b. S = a + (1 b)YD.
c. S = a + (1 b)/YD.
d. S = a + (1 b)/YD.