What Does the Income Effect Indicate About the Relationship Between

Multiple Choice

What does the income effect indicate about the relationship between the wage rate and leisure on the quantity of labour supplied?

A) At a higher wage rate, the quantity of labour supplied increases because leisure is considered an inferior good.
B) At a higher wage rate, the quantity of labour supplied decreases because leisure is considered an inferior good.
C) At a higher wage rate, the quantity of labour supplied decreases because leisure is considered a normal good
D) At a higher wage rate, the quantity of labour supplied increases because leisure is considered a normal good.