In the current period a perceived increase in the real wage, will cause households to:
A)work more.
B)consume more goods.
C)consume less leisure.
D)all of the above.

Question

Quizplus · Accepted Answer

An increase in real wage means that the income of households has increased in terms of purchasing power. As a result, households are more likely to work more to earn more income and consume more goods. Since the hourly wage has increased, there is an opportunity cost associated with taking leisure time instead of working, which means households consume less leisure. Therefore, all of the above options are correct.

In the Current Period a Perceived Increase in the Real