A decrease in corporate profits, resulting in a decline in dividend payments, will decrease consumption and decrease labor supply.

Question

Quizplus · Accepted Answer

A decrease in corporate profits and subsequent decline in dividend payments may decrease consumption due to lower income for investors, but it does not directly affect labor supply. Labor supply decisions are more influenced by wages, working conditions, and the need for employment rather than dividend income.

A Decrease in Corporate Profits, Resulting in a Decline in Dividend