Assume x and y are the only two goods a person consumes. If after a rise in pX the quantity demanded of y increases, one could say:
a. the income effect dominates the substitution effect.
b. the substitution effect dominates the income effect.
c. it is still impossible to determine whether the substitution or income effect dominates.
d. none of the answers is correct.
b
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If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent, then the real interest rate is
a. -7.5 percent. b. -2.5 percent. c. 2.5 percent. d. 7.5 percent.
After the imposition of the quota, the quantity demanded of TVs is ________.
A. 100,000 B. 80,000 C. 40,000 D. 20,000
The base period for CPI calculations is generally 1982-84. In 2005, 50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s. This potential for bias in the CPI is referred to as ________ bias and
results in ________. A) outlet; the CPI underestimating the true change in the cost of living B) new product; the CPI overestimating the true change in the cost of living C) outlet; the CPI overestimating the true change in the cost of living D) net product; the CPI underestimating the true change in the cost of living
Euro-optimists believe the success of the euro to be the result of all of the following, EXCEPT:
A) more trade leads to more success for the euro. B) more countries are lining up to join the euro. C) more capital and labor mobility will take place under the euro. D) more scope for asymmetric shocks, rather than symmetric shocks.