For an inferior good,
a. the income effect is greater than the substitution effect.
b. the income effect is smaller than the substitution effect.
c. the income effect equals to the substitution effect.
d. none of the above occurs.
b. the income effect is smaller than the substitution effect.
You might also like to view...
Entrepreneurship is
A) the talent for organizing the use of land, labor and capital, among other things. B) skill in influencing government regulators and legislators. C) accumulated technical knowledge in using labor and capital. D) knowledge of the particular natural resources to be found in a given area.
Which best describes the Keynesian transmission mechanism when the money supply increases?
A) The interest rate rises; this in turn reduces investment spending, which in turn raises total expenditures and shifts the AD curve rightward. B) The interest rate falls; this in turn stimulates investment spending, which in turn raises total expenditures and shifts the AD curve leftward. C) The interest rate falls; this in turn stimulates investment spending, which in turn raises total expenditures and shifts the AD curve rightward. D) The interest rate falls; this in turn stimulates investment spending, which in turn lowers total expenditures and shifts the AD curve leftward.
When mortgage loans are securitized, they are
A) bundled together by financial institutions and sold to investors. B) issued to borrowers with flawed credit histories. C) issued to borrowers who fail to document their income. D) guaranteed by the federal government.
Repeated games are conducive to
A) explicit cooperation. B) tacit cooperation. C) corruption. D) failing to have a Nash equilibrium.