Adoption of a guaranteed annual income with benefits (B) given by
B = 20,000 -.5 (earnings)
Would be expected to reduce work effort by low wage workers because:
A) the income effect would outweigh the substitution effect of the plan.
B) the substitution effect would outweigh the income effect of the plan.
C) both substitution and income effects would operate to reduce work effort.
D) the plan would make working financially unattractive.
Correct Answer:
Verified
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