McqMate
| Q. |
Why does a temporary decrease in government purchases decrease labour supply in the classical model? |
| A. | the fall in government spending decreases labour demand, decreasing the real wage, and so people decrease their labour supply. |
| B. | the decrease in current or future taxes needed to pay for the decrease in government purchases increases people\s wealth. |
| C. | people prefer to work less when the government is doing less for them. |
| D. | decreased government purchases make people worse off, so they work less hours. |
| Answer» B. the decrease in current or future taxes needed to pay for the decrease in government purchases increases people\s wealth. | |
View all MCQs in
Macroeconomics, Theories and Policies 2No comments yet