Ummal travels back in time to deposit $100 in a high-interest-bearing savings account.When she returns to the present,she is a billionaire.We can expect Ummal to work ________ hours because of the ________ effect.
A) more; substitution
B) more; income
C) fewer; substitution
D) more; labor-leisure
E) fewer; income

Question

Quizplus · Accepted Answer

The income effect suggests that as people become wealthier (in this case, Ummal becoming a billionaire), they can afford to work less and enjoy more leisure time, hence "fewer" hours due to the "income" effect.

Ummal Travels Back in Time to Deposit $100 in a High-Interest-Bearing