The income effect refers to a change in:
A. income because of changes in the CPI.
B. the quantity demanded of a good because of a change in the buyer's real income.
C. the quantity demanded of a good because of a change in the buyer's money income.
D. price of a good because of a change in the buyer's real income.
Answer: B
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Refer to Figure 2-18. Which two arrows in the diagram depict the following transaction: Myrna earns $450 for working at HempHill's Drug Store
A) J and M B) K and G C) K and M D) J and G
An excise tax levied on a product will impose a smaller relative burden on consumers (and a larger relative burden on sellers) when:
a. the supply of the product is relatively inelastic. b. the supply of the product is relatively elastic. c. the demand for the product is relatively elastic. d. either a or c is true.
Which of the following are justifications for running a budget deficit?
a. stabilizing the economy during a recession b. future generations will benefit from some current expenditures c. both a and b d. neither a nor b
Which of the following is a factor that affects both the supply of and demand for a good?
A. Technology B. Price of inputs C. Consumers' income D. Government regulations