When the price of a product increases, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes
A. an inferior good.
B. the substitution effect.
C. the income effect.
D. the rationing function of prices.
Answer: B
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The chairman of the Federal Reserve System:
A. is approved by the House of Representatives and the Senate. B. serves a four-year term. C. is independent of the Board of Governors, to maintain objectivity. D. All of these are true.
In the Keynesian transmission mechanism, if investment is completely interest-insensitive, then an increase in the money supply will
A) cause total expenditures and aggregate demand to increase. B) cause total expenditures and aggregate demand to decrease. C) have no impact on total expenditures and aggregate demand. D) cause total expenditures to increase and aggregate demand to decrease. E) cause total expenditures to decrease and aggregate demand to increase.
How many cars will this country import in an open economy situation?
A. 40,000 B. 20,000 C. 60,000 D. 80,000
A massive selling of domestic currency assets by domestic and foreign financial investors is called:
A. a speculative attack. B. a currency revaluation. C. protectionism. D. a currency devaluation.