The change in people's purchasing power that occurs when the price of a good they purchase changes, assuming all else is held constant is known as
A. the multiplier effect.
B. the elasticity effect.
C. the substitution effect.
D. the real income effect.
Answer: D
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Indicate whether the statement is true or false
Actual investment spending includes spending by consumers on
A) services. B) nondurable goods. C) new houses. D) durable goods.
The unemployment rate measures: a. unemployed workers as a percentage of the population
b. unemployed workers as a percentage of the population over the age of sixteen. c. unemployed workers as a percentage of the labor force. d. the number of people unemployed divided by the number of people employed.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.