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i) Indicate in each of the following instances

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2i) Indicate in each of the following instances whether the specified circumstances will cause a worker to want to work more or fewer hours;a - the wage rate increases and the substitution effect is greater than the income effect;b - the wage rate decreases and the income effect is greater than the substitution effect;c - the wage rate decreases and the substitution effect is greater than the income effect;d - the wage rate increases and the income effect is greater than the substitution effect.;ii) The "supply-side" economics of the Reagan administration (1981-1988) presumed that income tax cuts would stimulate incentives to work and thereby increase economic growth.;a - Demonstrate this outcome with a work-leisure diagram.;b - What does the outcome assume about the relative sizes of the income and substitution effects?;c - Explain: "The predicted increase in work incentives associated with supply-side tax cuts might in fact be more relevant for women than for men.

 

Paper#26976 | Written in 18-Jul-2015

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