A temporary increase in government spending ________, and a permanent increase in government spending ________.
A) shifts the labor supply up; shifts the labor supply up
B) shifts the labor supply up; has no impact on labor supply
C) shifts the labor demand up; shifts the labor supply down
D) has no impact on labor demand; shifts the labor supply down
E) shifts the labor supply up; shifts the labor demand down

Question

Quizplus · Accepted Answer

A temporary increase in government spending shifts the labor supply up because it increases the demand for labor, while a permanent increase in government spending has no impact on labor supply because it does not change the relative prices of goods and services.

A Temporary Increase in Government Spending ________, and a Permanent