Question 1
As the economy starts to contract, labor productivity falls as firms hold excess labor.
◦ true
◦ false
Question 2
Which of the following is
true of a change in dividend payments?
◦ There is no substitution effect because a change in dividend payments does not change the trade-off between work and leisure.
◦ 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.
◦ There is no income effect because a change in dividend payments does not change a household's permanent income.