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The Substitution Effect of an Increase in the Wage Rate

Question 18

Multiple Choice

The substitution effect of an increase in the wage rate on the quantity of leisure demanded


A) makes leisure more expensive which leads people to work more.
B) makes leisure less expensive which causes people to work less.
C) gives people more purchasing power and causes people to demand more leisure.
D) gives people less purchasing power and so they will demand less leisure.

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