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The Assumption That Current-Period Labor Supply Is Positively Related to the Current-Period

Question 2

Multiple Choice

The assumption that current-period labor supply is positively related to the current-period real wage is justified as long as the


A) income effect dominates the substitution effect in the short run.
B) income effect dominates the substitution effect in the long run.
C) substitution effect dominates the income effect in the short run.
D) substitution effect dominates the income effect in the long run.

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