. Supose that ·Total Factor Productivity increases ·Capital depreciates by 10% Everything else equal, what happens to labor demand in the economy? A. It decreases (i.e. shifts to the left of the demand curve) B. It increases (i.e. shifts to the right of the demand curve) C. Not enough information to answer 2. Does an increase in the wage causes leisure always to increase, because leisure is a normal good? A. Yes B. No C. Only if the substitution effect dominates the income effect D. Only if the income effect dominates the substitution effect
. Supose that ·Total Factor Productivity increases ·Capital depreciates by 10% Everything else equal, what happens to labor demand in the economy? A. It decreases (i.e. shifts to the left of the demand curve) B. It increases (i.e. shifts to the right of the demand curve) C. Not enough information to answer 2. Does an increase in the wage causes leisure always to increase, because leisure is a normal good? A. Yes B. No C. Only if the substitution effect dominates the income effect D. Only if the income effect dominates the substitution effect
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter20: Unemployment
Section: Chapter Questions
Problem 1PA
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1. Supose that
·Total Factor Productivity increases
·Capital
Everything else equal, what happens to labor demand in the economy?
A. It decreases (i.e. shifts to the left of the demand curve)
B. It increases (i.e. shifts to the right of the demand curve)
C. Not enough information to answer
2. Does an increase in the wage causes leisure always to increase, because leisure is a normal good?
A. Yes
B. No
C. Only if the substitution effect dominates the income effect
D. Only if the income effect dominates the substitution effect
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