Which of the following is trueof a change in nonlabor income?

[tiffannnnyyyyyy]

Question 1

Monetary policy is less effective than it was in the past because

◦ investment has become less sensitive to interest rate changes.
◦ the substitution effect of an interest rate change on consumption has increased.
◦ the income effect of an interest rate change on consumption has increased.
◦ the government deficit has decreased.

Question 2

Which of the following is 
true of a change in nonlabor income?

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

[covalentbond]

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[tiffannnnyyyyyy]

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[covalentbond]

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