The substitution effect isolates the change in the consumption of a good caused by:
A. the change in the relative prices of two goods.
B. the change in consumer preferences.
C. the lower "real" income.
D. None of the statements is correct.
Answer: A
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If the labor demand curve shifts to the right due to a government policy during a recession, and if wages are flexible, ________
A) real wages will increase B) real wages will decrease C) prices will fall D) unemployment will increase
The role of the currency exchange rate is embedded in the import expenditure equation as:
A) autonomous import spending. B) marginal propensity to import. C) autonomous export spending. D) none of the above.
The practice of making choices using generalizations based on observable characteristics like race, gender, or age is called:
A. discrimination. B. means-testing. C. conditional cash transfers. D. None of these is true.
When we consider our savings, interest rates _________ and inflation rates ___________ the value.
A. increase; decrease B. decrease; increase C. increase; increase D. have no real effect; decrease