When the price of a normal good decreases, the ________ can be divided between the ________, which keeps the best affordable point on the same indifference curve and the ________, which moves the best affordable point farther away from the origin
A) substitution effect; price effect; income effect
B) price effect; income effect; substitution effect
C) income effect; substitution effect; price effect
D) price effect; substitution effect; income effect
D
You might also like to view...
A strategy is dominated if:
A. there are no other strategies that yield higher payoffs, regardless of others' choices. B. there is some other strategy that yields a strictly higher payoff regardless of others' choices. C. there is some other strategy that yields a strictly higher payoff in some circumstances and that never yields a lower payoff regardless of others' choices. D. there is some other strategy that yields a strictly higher payoff in some circumstances and may yield a lower payoff, depending upon other players' choices.
Inflation exists whenever: a. the price of a good increases
b. the price of a good decreases. c. the economy experiences a contraction. d. the overall price level is rising.
It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers
a. True b. False Indicate whether the statement is true or false
Refer to the above figure. Suppose the economy is at E and the government uses an expansionary fiscal policy to move the aggregate demand curve to AD 2. In the end, the aggregate demand curve is still AD 1. A possible reason for this is that
A. the economy is already at full employment. B. the increased borrowing causes higher interest rates, which encourage people to save more and increase investment spending due to the extra saving. C. some of the increased government spending is not counted in GDP. D. people increase saving because they anticipate higher future taxes, resulting in a reduction in current consumption spending that offsets the increased government spending.